[Senate Hearing 115-121]
[From the U.S. Government Publishing Office]








                                                        S. Hrg. 115-121


                  NOMINATIONS OF BRIAN D. MONTGOMERY,
                    ROBERT HUNTER KURTZ, AND SUZANNE
                              ISRAEL TUFTS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                            NOMINATIONS OF:

 Brian D. Montgomery, of Texas, to be Assistant Secretary for Housing, 
     Federal Housing Commissioner, Department of Housing and Urban 
                              Development

                               __________

Robert Hunter Kurtz, of Virginia, to be Assistant Secretary For Public 
    And Indian Housing, Department of Housing and Urban Development

                               __________

   Suzanne Israel Tufts, of New York, to be Assistant Secretary For 
      Administration, Department of Housing and Urban Development

                               __________

                            OCTOBER 26, 2017

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs




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            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      MIKE CRAPO, Idaho, Chairman

RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
BOB CORKER, Tennessee                JACK REED, Rhode Island
PATRICK J. TOOMEY, Pennsylvania      ROBERT MENENDEZ, New Jersey
DEAN HELLER, Nevada                  JON TESTER, Montana
TIM SCOTT, South Carolina            MARK R. WARNER, Virginia
BEN SASSE, Nebraska                  ELIZABETH WARREN, Massachusetts
TOM COTTON, Arkansas                 HEIDI HEITKAMP, North Dakota
MIKE ROUNDS, South Dakota            JOE DONNELLY, Indiana
DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada

                     Gregg Richard, Staff Director

                 Mark Powden, Democratic Staff Director

                      Elad Roisman, Chief Counsel

                 Matt Jones, Professional Staff Member

                 Elisha Tuku, Democratic Chief Counsel

            Laura Swanson, Democratic Deputy Staff Director

           Beth Cooper, Democratic Professional Staff Member

            Erin Barry, Democratic Professional Staff Member

             Megan Cheney, Democratic Legislative Assistant

                       Dawn Ratliff, Chief Clerk

                     Jimmy Guiliano, Hearing Clerk

                      Shelvin Simmons, IT Director

                          Jim Crowell, Editor

                                  (ii)























                            C O N T E N T S

                              ----------                              

                       THURSDAY, OCTOBER 26, 2017

                                                                   Page

Opening statement of Chairman Crapo..............................     1

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     2

                                NOMINEES

Brian D. Montgomery, of Texas, to be Assistant Secretary for 
  Housing, Federal Housing Commissioner, Department of Housing 
  and Urban
  Development....................................................     5
    Prepared statement...........................................    29
    Biographical sketch of nominee...............................    31
    Responses to written questions of:
        Senator Brown............................................    65
        Senator Shelby...........................................    69
        Senator Scott............................................    69
        Senator Perdue...........................................    70
        Senator Kennedy..........................................    71
        Senator Menendez.........................................    73
        Senator Donnelly.........................................    78
        Senator Schatz...........................................    79
        Senator Cortez Masto.....................................    80
Robert Hunter Kurtz, of Virginia, to be Assistant Secretary for 
  Public and Indian Housing, Department of Housing and Urban 
  Development....................................................     7
    Prepared statement...........................................    46
    Biographical sketch of nominee...............................    47
    Responses to written questions of:
        Senator Brown............................................    82
        Senator Scott............................................    84
        Senator Menendez.........................................    85
        Senator Heitkamp.........................................    88
        Senator Donnelly.........................................    90
        Senator Cortez Masto.....................................    90
Suzanne Israel Tufts, of New York, to be Assistant Secretary for 
  Administration, Department of Housing and Urban Development....     8
    Prepared statement...........................................    55
    Biographical sketch of nominee...............................    56
    Responses to written questions of:
        Senator Brown............................................    93

              Additional Material Supplied for the Record

Letters submitted in support of the nomination of Brian D. 
  Montgomery.....................................................    96
Letters submitted in support of the nomination of Robert Hunter 
  Kurtz..........................................................   112

                                 (iii)
                                 


 
NOMINATIONS OF BRIAN D. MONTGOMERY, OF TEXAS, TO BE ASSISTANT SECRETARY 
 FOR HOUSING, FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND 
 URBAN DEVELOPMENT; ROBERT HUNTER KURTZ, OF VIRGINIA, TO BE ASSISTANT 
  SECRETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND 
    URBAN DEVELOPMENT; AND SUZANNE ISRAEL TUFTS, OF NEW YORK, TO BE 
ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HOUSING AND URBAN 
                              DEVELOPMENT

                              ----------                              


                       THURSDAY, OCTOBER 26, 2017

                                       U.S. Senate,
           Committee on Banking, Housing, and Urban Affairs
                                                    Washington, DC.
    The Committee met at 10 a.m., in room SD-538, Dirksen 
Senate Office Building, Hon. Michael Crapo, Chairman of the 
Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. Good morning. This hearing will come to 
order.
    This morning, we will consider the nominations of three 
more individuals to serve in key roles in the Department of 
Housing and Urban Development.
    Welcome to all of you, and congratulations on your 
nominations to these important positions. I see friends and 
family behind you, and I welcome them here today as well.
    The nominees before us are Brian Montgomery to be the 
Assistant Secretary for Housing and Federal Housing 
Commissioner, Hunter Kurtz to be Assistant Secretary for Public 
and Indian Housing, and Suzanne Tufts to be Assistant Secretary 
for Administration.
    If confirmed, each of these nominees will play a major role 
in promoting access to safe and affordable housing for families 
in America. Each also brings a wealth of experience and 
expertise that will guide them well throughout their service at 
HUD.
    The Federal Housing Administration, or FHA, plays a major 
role in our housing finance system by setting credit guidelines 
and providing insurance for millions of home mortgages across 
the country, yet it has been over 3 years since FHA has had 
Senate-confirmed leadership.
    Brian Montgomery is an ideal candidate to take up that 
mantle, given that he has done it before. He has provided 
steadfast leadership at the helm of FHA between 2005 and 2009, 
during one of the most trying times that housing markets have 
ever seen.
    Mr. Montgomery is also no stranger to this Committee, 
having testified before us on six other occasions on matters 
relating to housing and housing finance, and we welcome him 
back once again.
    Hunter Kurtz has dedicated nearly his entire career to 
housing policy, including over a decade of time at HUD, and has 
had a hand in implementing housing programs at both the local 
and Federal level. Most recently, he has served as a key voice 
within HUD, as Deputy Chief of Staff for Policy and Programs. 
Mr. Kurtz will bring this programmatic expertise to the Office 
of Public and Indian Housing, where he will oversee some of 
HUD's largest programs, including Public Housing and Housing 
Choice Vouchers.
    Suzanne Tufts, over her distinguished career as an 
attorney, consultant, and CEO, has developed an expertise in 
turnaround management and leadership development for both 
Government and nonprofit organizations. As Assistant Secretary 
for Administration at HUD, she would oversee HUD's enterprise-
level training, staffing, recruitment, and performance 
management, and would advise Secretary Carson on human resource 
matters. Ms. Tufts' reputation as an outside-the-box and 
entrepreneurial thinker will make her a great addition to HUD's 
leadership team.
    I urge my colleagues to confirm all three of you without 
delay as well as to confirm other HUD nominees that are still 
pending before the Senate.
    Once again, congratulations to all of you on your 
nominations to these important offices, and thank you for your 
willingness to serve.
    Senator Brown.

               STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. Thank you, Mr. Chairman.
    I want to join Chairman Crapo in welcoming our nominees and 
their families and look forward to hearing their introductions 
too, and thanks for your willingness to serve in these key 
public service roles.
    The Committee has gathered today to consider the 
nominations of three individuals to serve at the Department of 
Housing and Urban Development. HUD plays an important role in 
addressing housing needs of families in Ohio and all around the 
country.
    The Chairman pointed out, not for the first time in this 
Committee, that these positions have been unfilled for far too 
long. I think it is important--and I absolutely do not blame 
this Chairman for this--it has happened over and over, and I 
think it is important to remind people that in the last 
Congress, this Committee just refused to move on almost any 
nominee. That is one reason we have so many openings at the 
Federal Reserve. It is why some of these jobs have remained 
unfilled. And I think it is important that we acknowledge that 
and know that, and that the Trump administration understands 
that the party that is not his is cooperating now with nominees 
when 2 years ago, when the shoes were on the other feet, when 
it was reversed, this Committee did not cooperate with a 
Democratic President.
    We consider these nominees at a time when the Nation faces 
a number of housing challenges. The gap between housing cost 
and wages has grown wider over the past decade. Over half-a-
million Americans face homelessness on any given night. A 
quarter of all renters pay more than half of their incomes 
toward rent. That makes your jobs and the job of HUD even more 
essential to this Nation's national interest. At the same time, 
we are losing existing affordable housing due to physical 
deterioration, expiring affordability contracts, and increasing 
rents for previously in expensive homes.
    Access to mortgages for creditworthy borrowers remains 
tight, making it hard for families to purchase a home and build 
well. The FHA provides mortgage insurance to help creditworthy 
borrowers access affordable and stable mortgage credit plays an 
important countercyclical role in ensuring credit remains 
available in all markets and all market conditions. To assist 
in that role, FHA has taken steps to expand its quality 
assurance program and to upgrade its technology.
    If confirmed, Mr. Montgomery--and welcome--would oversee 
over 1.2 million units of privately owned HUD-assisted 
affordable housing for low-income families. As FHA 
Commissioner, he would be entrusted to guide the FHA into the 
future, ensuring both broad access to mortgage credit and 
adequate oversight of participating lenders to avoid the 
mistakes of the past. I look forward to hearing more from Mr. 
Montgomery about how he will continue those efforts while 
protecting taxpayers from lenders who do not play by the rules.
    If confirmed as Assistant Secretary for Public and Indian 
Housing, Mr. Kurtz will oversee the public housing and Section 
8 Housing Choice Voucher programs, which help 3.3 million 
households in urban, suburban, and rural communities find 
affordable housing. Mr. Kurtz would administer programs to 
address the deep housing needs of Native American, Alaska 
Native, and Native Hawaiian communities. And there are a number 
of Members on this Committee that care so much about Indian 
housing and Native American housing and Native Hawaiian 
community housing.
    If confirmed as the Assistant Secretary for Administration, 
Ms. Tufts would oversee human resources at the Department. This 
work will become even more critical in the coming years, as 
many in HUD's workforce near retirement age and with Trump 
budget cuts, which I hope that you will do all you can 
internally with the Secretary to oppose those cuts.
    If confirmed, the nominees before us today would oversee 
rental assistance for 4.5 million low-income seniors, 
individuals with disabilities, and families; manage the Federal 
Government's primary mortgage insurance programs; and ensure 
that HUD has the workforce necessary to deliver on this 
important mission.
    In addition, they are likely to have a hand in helping 
families and communities from Texas to Puerto Rico--remember 
Puerto Ricans are American citizens, something the White House 
intermittently remembers and forgets--to help them recover from 
some of the worst natural disasters the Nation has ever seen. 
HUD will have a large role to play in ensuring that the 
recovery is equitable, effective, and leaves our communities 
more resilient to future disasters.
    Given the importance of HUD's programs and HUD's mission, 
it is disappointing the Administration has chosen to undermine 
it with a 15 percent cuts in proposed cuts to HUD's programs.
    Mr. Montgomery was at that agency and with a President that 
actually understood HUD's mission and cared about HUD's 
mission, and he knows what those budget cuts mean to his job. 
Thank you for taking it in spite of that and still willing to 
meet this challenge, and we are counting on you in so many ways 
on these issues.
    The budget would eliminate funding for 250,000 Section 8 
Housing Choice Vouchers at a time when Federal housing 
assistance reaches just one out of every four eligible 
households.
    Despite an estimated $26 billion backlog of repair needs, 
the Administration proposed cutting the Public Housing Capital 
Fund by nearly 70 percent. I am hopeful that the three of you 
can teach this Secretary of HUD what that means. I am not sure 
he understands it. He is a smart man but did not have a lot of 
background in housing, and we are counting on the three of you 
who understand these issues perhaps better than your boss.
    While Secretary Carson has committed to advocate for 
housing funds as part of an Administration infrastructure 
proposal, we have yet to see any detailed infrastructure plan 
from the Administration and no mention of housing in even the 
loose outlines it has released.
    I forward to hearing from each of the nominees about how 
they would approach the important roles for which they have 
been nominated.
    I would close with suggesting to each of you before you are 
confirmed, assuming that the three of you likely will, that you 
read Matthew Desmond's book, ``Evicted''. When I met with him 
and I asked him to sign the book that I had actually 
purchased--I want you to know that--he wrote on it--he wrote 
``Home equals life''. And the importance of public housing, the 
importance of every American having a clean, decent, affordable 
place to live is about as basic and great as anything any of us 
can do. I know you take that role seriously, the three of you, 
from looking at your backgrounds and discussions you have had 
with staff.
    We have a lot to do. Thank you.
    Chairman Crapo. Thank you, Senator Brown.
    We will now administer the oath, and would each of you 
please rise and raise your right hand. Do you swear or affirm 
that the testimony you are about to give is the truth, the 
whole truth, and nothing but the truth, so help you God?
    Mr. Montgomery. I do.
    Mr. Kurtz. I do.
    Ms. Tufts. I do.
    Chairman Crapo. And do you agree to appear and testify 
before any duly constituted Committee of the Senate?
    Mr. Montgomery. I do.
    Mr. Kurtz. I do.
    Ms. Tufts. I do.
    Chairman Crapo. You may be seated.
    As I am sure you have been already advised, your written 
statements will be made a part of the record. We ask you to try 
to keep your testimony to 5 minutes so the Senators will have 
an opportunity to use their 5 minutes for questioning, and 
before you begin your statement, each of you are certainly 
invited to introduce your family who are here in attendance 
with you.
    And with that, Mr. Montgomery, please proceed.

  STATEMENT OF BRIAN D. MONTGOMERY, OF TEXAS, TO BE ASSISTANT 
SECRETARY FOR HOUSING, FEDERAL HOUSING COMMISSIONER, DEPARTMENT 
                OF HOUSING AND URBAN DEVELOPMENT

    Mr. Montgomery. Thank you, Mr. Chairman
    I would like to introduce my wife, Katy, and my daughter, 
Emily, who just turned 11 on Sunday--she will tell you that, do 
not worry--and Thomas, my son, who is 8 years old. Thank you 
all for being here.
    Well, thank you, Chairman Crapo, Ranking Member Brown, and 
all the Members of the Committee. I am honored to appear before 
you today to once again to be considered as HUD's Assistant 
Secretary for Housing and Federal Housing Commissioner, and I 
am grateful to the President and Secretary Carson for their 
confidence in my abilities to serve in this position.
    I was humbled by the confidence this Committee placed in me 
12 years ago, and I sincerely hope that I earned your trust 
between 2005 to 2009 and when I previously served as 
Commissioner, including 6 months into the Obama administration.
    Some of my Republican friends still ask me why I agreed to 
serve in a Democratic administration, and my answer, quite 
frankly, has always been the same: ``They asked for my help.'' 
It was literally that simple. Now when I am asked why would I 
want to return to HUD, the answer is just as simple: ``I 
believe I can make a positive difference.''
    Public service is an honor that I take very seriously, and 
if confirmed, I will do my best to, once again, further equal 
access to affordable rental, housing, and home ownership 
opportunities, and seek solutions to restore vitality to the 
housing market.
    During my tenure at HUD, I am proud of the work we did to 
preserve FHA as a viable option for homebuyers. Working with 
this Committee, we were able to pass the Housing and Economic 
Recovery Act of 2008. That legislation placed FHA on sounder 
financial footing by kicking out the seller-funded down-payment 
programs that were hurting borrowers and decimating the FHA 
Fund of more than $15 billion.
    We were also able to expand home ownership opportunities by 
giving borrowers, especially minorities and first-time 
homebuyers, a safer option than the subprime loans that were so 
prevalent back then.
    FHA played no role in the housing boom or the collapse, but 
it was FHA, quite frankly, that stepped in and provided more 
than a trillion dollars in mortgage liquidity that helped more 
than 8 million families purchase or retain their homes between 
2008 and 2012, and I am extremely proud of the effort that the 
HUD career staff played in that role.
    Putting an exclamation point on that role, one noted 
economist said in 2011, quote, ``If FHA lending had not 
expanded after private mortgage lending collapsed, the housing 
market would have cratered, taking the economy with it.''
    Well, nearly 10 years after the housing collapse, there is 
still much work that needs to be done. The home ownership rate 
today is the same as it was in 1968, and there is too little 
affordable rental housing in too many communities across 
America. In fact, HUD's latest ``Worst Case Housing Need'' 
report that was released in August indicated that in 2015, the 
most recent data, more than 8.3 million low-income households 
not receiving housing assistance paid more than half of their 
income in rent.
    But getting back to housing, home ownership for many, while 
the market continues to recover, far too many creditworthy 
borrowers, many of them prospective first-time homebuyers and 
minorities and young families, in my opinion, are being left 
out.
    The Urban Institute has estimated that more than 6 million 
more mortgages would have been made between 2009 and 2015 if 
credit standards had been similar to what they were in the 
reasonable ones in 2001, well before the housing boom. One 
reason for the tight credit environment is that many lenders 
remain very sensitive about defaults and claims out of fear of 
enforcement actions.
    Just to be very clear, fraud and misrepresentation have no 
place in any industry, much less the one that represents the 
largest investment families will ever make. We must do a better 
job of providing regulatory clarity to mortgage lenders, but 
quite frankly, I think it is time we start treating them more 
like partners than adversaries.
    Another key part of FHA's mission is to support safe and 
affordable rental housing. During my previous tenure as 
Commissioner, we made unprecedented changes to leverage private 
capital with Federal resources in order to increase the supply 
of quality rental housing for people with limited incomes.
    I was pleased to see Secretary Donovan and his team 
continue that important objective and greatly expand it, I 
would add.
    But as rental cost, house burdens begin to grow and worst-
case housing needs remain unmet, there is more work that needs 
to be done. I also believe nonprofit organizations who are at 
the forefront of developing housing solutions could be better 
utilized at FHA.
    Another high priority is FHA's technology. I think it is 
time to address the outdated systems there. The GSEs have been 
able to spend millions of dollars upgrading their technology, 
but as I like to say, FHA is still looking for loose change 
under the sofa cushions. And that has to end.
    FHA and Ginnie Mae generate billion dollars in receipts, 
and I think they should be able to use some of that to fund IT 
improvements. Doing so will help reduce the financial risk to 
taxpayers and ensure that FHA can operate on a stable platform 
for years to come.
    I thank the Committee for your time today and my 
consideration as nomination of FHA Commissioner, and I look 
forward to answering your questions. Thank you.
    Senator Brown [presiding]. Thank you, Mr. Montgomery.
    Mr. Kurtz, welcome, and feel free to introduce anyone you 
want.

STATEMENT OF ROBERT HUNTER KURTZ, OF VIRGINIA, TO BE ASSISTANT 
SECRETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING 
                     AND URBAN DEVELOPMENT

    Mr. Kurtz. Sure. Thank you. Thank you, Chairman Crapo, 
Ranking Member Brown, and Members of the Committee. I am 
humbled and honored to appear before you today as you consider 
my nomination to serve as the Assistant Secretary for Public 
and Indian Housing at the U.S. Department of Housing and Urban 
Development.
    I want to extend my sincere thanks and gratitude to 
Secretary Carson for recommending me for this position and 
President Trump for nominating me.
    Joining me today are my wife, Abby; my two boys, Liam and 
Henry; my parents, Bob and Candy; my brother, Chase; my sister-
in-law, Autumn; and my cousin, Debbie.
    As well, I want to thank my friends from HUD who are here 
today watching this--and watching this hearing, both career and 
political employees.
    Having served at the Department as a political appointee in 
the Bush administration, a career civil servant during the 
Obama administration, and now again as an appointee in the 
Trump administration, I believe I bring a unique background and 
diverse perspective to the position for which I am nominated.
    Additionally, I worked for the city of Detroit, where I 
interacted with many of HUD's programs. I am a houser at heart, 
a practitioner of HUD programs, and a true believer in the 
mission of the Department. I have seen firsthand what we can do 
with HUD programs, but I have also had the opportunity to help 
craft rules and regulations that I have then had to implement 
at the local level. And I can affirm that what I thought was a 
good idea in my chair in Washington made a lot less sense when 
sitting in my seat in Detroit.
    My time at the city of Detroit, in many ways, was 
inspirational. I was blessed to work with an incredible team to 
help turn around a housing department considered among the 
worst performing in the Nation. In conjunction with the Mayor's 
office, private-sector developers, and the City's Housing 
Commission, we began the development and production of safe and 
affordable housing for the city and its residents.
    While the renaissance that is now taking place in the city 
of Detroit is something which I am extremely proud, the real 
reward for me is seeing the joy on the faces and individuals 
that we were able to help. They will always be a reminder of 
what we do in public housing and public service on a day-to-day 
basis. We help people.
    One of the fundamental lessons I have learned in working 
with the City was not only the impact of the policies we create 
at HUD and in Washington, but that a one-size-fits-all approach 
to creating more sustainable, affordable housing does not work.
    The issues that Detroit faces are different than those 
faced by Seattle, Boise, and the tribal lands. We should give 
serious thought to allowing public housing authorities more 
control of how they manage their portfolios and how to find 
unique ways to address their own housing needs. The people who 
know best are the local officials managing the local PHAs, and 
we should provide them with the tools they need to address 
their own unique issues. If confirmed, this will be a major 
goal of mine, and I look forward to working with you all to 
make it a reality.
    The Nation is facing an affordable housing crisis, and we 
cannot just build our way out of it. Today, only a quarter of 
those who are eligible for housing assistance actually receive 
it. We must find ways to graduate residents from public housing 
and put them on a path to achieving greater economic mobility 
and self-sufficiency, which allows us to serve others that need 
our assistance. This is a priority of Secretary Carson, one in 
which I wholly and enthusiastically support.
    If confirmed, I look forward to building on the successes 
of our current programs while working with the Secretary to 
implement new and innovate ways to achieve HUD's mission.
    While I have spent some time discussing public housing 
programs, I would also like to let the Committee know that, if 
confirmed, I will also focus on the Native American programs 
that are such an integral part of the work that HUD does in the 
Office of Public and Indian Housing.
    I had the opportunity to travel to Indian Country with 
Secretary Carson earlier this year in my current capacity and 
appreciate and understand the needs of our tribal partners. 
Please know that I will continue to work with our tribal 
partners--and I want to stress the ``with our tribal 
partners''--to ensure safe, decent, and affordable housing for 
these communities.
    If confirmed, I look forward to working with the Members of 
this Committee to help improve the lives of those Americans who 
rely on programs managed by the Office of Public and Indian 
Housing.
    Thank you again for your consideration of my nomination, 
and I look forward to your questions.
    Senator Brown. Thank you, Mr. Kurtz.
    Ms. Tufts, welcome, and feel free to introduce whomever you 
want. Thank you.

STATEMENT OF SUZANNE ISRAEL TUFTS, OF NEW YORK, TO BE ASSISTANT 
 SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HOUSING AND URBAN 
                          DEVELOPMENT

    Ms. Tufts. Thank you, Ranking Member Brown, Mr. Chairman, 
and distinguished Members of the Committee. It is a great 
privilege to appear before you this morning. I am deeply 
honored that President Trump has nominated me to serve under 
Secretary Carson as the Assistant Secretary for Administration 
at the United States Department of Housing and Urban 
Development.
    I would like to introduce my husband of 35 years, Bob 
Tufts, and our wonderful daughter, Abby, no relation to his 
Abby. I also would like to thank my extended family, friends, 
my former colleagues for their love and support.
    One does not receive an opportunity like this without years 
of help from many people, and that is certainly the case for 
me.
    There are two people who could not be here today, but 
without whose courage and life experiences, I would not be the 
person I am or have the passion for public service that I do--
my late parents, Abraham and Henriette Israel. Born in Europe, 
they were living in Antwerp when, on the morning of May 10th, 
1940, they awoke to enemy aircraft overhead and an invasion 
forcing them to flee. For the next 10 years, until they came to 
the United States, they were homeless and lived wherever they 
could find a roof over their heads--in barns, in the back yards 
in the open air of peasants in the countryside who gave them 
shelter, and even one night sleeping under the pews of a church 
in France. As the only child of Holocaust survivors, making a 
difference and working in mission-based endeavors has been a 
guiding force in my life.
    However, I have long believed that passion does not produce 
results without having an administrative and human resources 
support infrastructure.
    I bring to bear three categories of skills and experience 
that I believe will help HUD improve its operations: first, 
experience in turnaround management and leadership development, 
particularly in mission-based organizations; second, experience 
in the field which makes me sensitive to HUD's ultimate 
customers; and third, experience as an outside-the-box creative 
thinker, someone who has strong analytical skills and the 
ability to both plan and implement with energy and enthusiasm.
    I gained these skills and experiences across many silos, 
including law, management, consulting, recruiting, and 
training. I served as the Regional Director at Region II of 
ACTION, currently the Corporation for National Service, where I 
not only worked with HUD on a variety of tenant empowerment, 
literacy, and microenterprise programs, but where I led the 
region in improving its service delivery.
    I have also served as the president and CEO of the American 
Women's Economic Development Corporation where I led the 
turnaround of a beloved but beleaguered organization. Our team 
succeeded in eliminating the organization's 10-year-old debt 
while privatizing funding and improving the organization's 
services, including online training. We spearheaded a 
nationally recognized entrepreneurship program for women living 
in the New York City Housing Authority in which 65 percent of 
program participants achieved financial independence and 
business success.
    But I believe AWED's most significant service was rendered 
after the 9/11 attacks, where within 72 hours, AWED provided 
emergency business relief and other services for our students, 
faculty, and alumni located in the Ground Zero area, efforts 
that earned the organization bipartisan recognition.
    My parents were able to make a wonderful life in this 
country, a life that started with a stable, affordable rental 
home in a safe, secure neighborhood, a home or rather an 
apartment which in time my husband and I as a young married 
couple were able to purchase and to raise our daughter. I can 
think of little that would be more meaningful than to help 
others find the same path to a better life for themselves and 
their families that my parents did.
    If confirmed, I will work hard to ensure that HUD's 
administrative and human resources services are best directed 
to fulfill its important mission.
    Mr. Chairman, distinguished Members of this Committee, 
thank you again very much for your consideration of my 
nomination. I am honored, and I welcome your questions.
    Chairman Crapo [presiding]. Thank you very much, Ms. Tufts.
    I apologize to the witnesses. I had to step out for a 
minute. There is an important markup going on that I may have 
to step out again for, but I deeply appreciate your 
participation here.
    I am going to yield my question period to Senator Corker.
    Senator Corker. Well, thank you, sir. You missed some 
outstanding testimony.
    Thank you all----
    Chairman Crapo. I will review it.
    Senator Corker. Thank you all for being here. We appreciate 
your desire to serve publicly and to help our Nation, and 
obviously, the areas you are serving, will be serving in, are 
very, very important to all of us.
    I am going to focus my comments to Mr. Montgomery. We 
welcome you back, and thank you for your willingness to do 
this.
    We have been struggling for years, maybe 9, to deal with 
some of the housing finance issues that our Nation is dealing 
with. I know you are very familiar with those, and I am hopeful 
that our Committee under Chairman Crapo's leadership--I know it 
is his desire and Sherrod Brown--our Ranking Member's desire to 
actually deal with the Fannie and Freddie components of housing 
finance reform, overseeing about $5 trillion in assets, and I 
hope that soon we are going to be able to do so on a bipartisan 
basis.
    Where we are today is probably not sustainable for the long 
haul, and it is long overdue. We have got an opportunity, I 
think, to do something very constructive.
    But part of that is when you look at housing finance 
reform, you have to look at FHA. If you squeeze the toothpaste, 
you know it comes out in another place, and really the two 
likely, probably, and actually should be dealt with together. 
Would you agree with that?
    Mr. Montgomery. Absolutely, Senator. I do not think you can 
discuss what you do with the GSEs without pulling the FHA into 
that discussion as well.
    Senator Corker. If I remember correctly--and I have been 
around here a long time, just a little under 11 years--I think 
you came in at a time to help us when we had some crises to 
deal with. Maybe I am wrong. I think that is right; is that 
correct?
    Mr. Montgomery. Yes, Senator. I was confirmed in June of 
2005, so I was there during the housing collapse and certainly 
when the recovery was taking hold.
    Senator Corker. Yeah. So I think you probably have some 
notions of some of the reforms that might be helpful at FHA 
itself. I wonder if you might just speak to some of the things 
that you would like to see us take on here.
    Mr. Montgomery. Certainly. Thank you.
    Establishing what the role of FHA should be, I think we 
have learned it has been an amazing agency that stepped in, in 
times of economic downturns, whether it was in the '80s during 
the oil-patch States. We certainly saw the role that FHA played 
after the housing market collapsed.
    This Committee and the House provided higher loan limits. 
They increased, obviously, the minimum cash investment, 
concerned about certainly the FHA Insurance Fund.
    But going forward, first off, it is not a level playing 
field. If you are looking at the GSEs, again, they have made 
overwhelming investments in technology. Good for them. But FHA, 
again, their systems are--one of them, the CHUM system was just 
sort of the backbone of everything FHA does. I believe it runs 
on a Wang mainframe. That technology is at least 30, 40 years 
old.
    You also have the False Claims Act, which has run a lot of 
the larger banks away from the FHA program. I am not saying you 
should look the other way when there is fraud or 
misrepresentation, but I hope we have a serious discussion 
about whether or not the False Claims Act is the right tool 
going forward.
    So I think you have to get them on a level playing field, 
and then do you want FHA--we need to look at the premiums. Are 
they where they should be? The cash investment, is it 
appropriate? Should it be just for first-time homebuyers? 
Again, there is a lot of questions.
    As a private citizen, I have some opinions. If confirmed, I 
will obviously look forward to discussing those with this 
Committee.
    Senator Corker. And that would be--thank you for the input 
you just gave, and I know you probably want to be confirmed and 
then speak more fully about those. And I hope you are 
confirmed, and I think you will be.
    So working with us, though, to work through the components 
that ought to be at the FHA and the components that ought to be 
at the GSEs, that would be interesting to you and something you 
would like to see happen for the good of our country?
    Mr. Montgomery. I never thought in October of 2008 when I 
was in this position that 9 years in the future, we would still 
be in conservatorship, but here we are.
    I mean, there are some deadlines, obviously, facing more of 
the GSEs, next year their operating budgets when they are swept 
down to zero. The GSE patch on the Qualified Mortgage Rule, I 
believe expires in 2021, and they are supposed to have plans in 
place in 2019. So there are some deadlines coming that I think 
will require some action.
    Senator Corker. Well, listen, thank you, and thanks to all 
three of you for your agreement to serve in these capacities, 
and I look forward to working with you.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Brown. Thank you, Mr. Montgomery.
    In previous testimony before this Committee, you stressed 
the importance of stable FHA-insured mortgages, and you said--
and I will quote--``While low initial monthly payments may have 
seemed like a good thing at the time, the reset rates on some 
interest-only loans are substantial, and many families have 
been and will continue to be unable to keep pace when the 
payments increase,'' unquote.
    Answer this, if you would. How does FHA underwriting differ 
from the underwriting on the interest-only or adjustable-rate 
mortgages offered by lenders leading up to the crisis, and why 
do those differences matter?
    Mr. Montgomery. Well, they matter a fair amount. The 
hallmark of FHA has been their underwriting. Certainly, the 
technology improvements would help that, but every FHA loan is 
fully underwriting, as outlined in the FHA handbook. We did not 
see that during the housing boom on too many loans. The 
interest-only loan had previously been used more by higher-
income borrowers. We saw it, in my opinion, abused during the 
housing boom, and again, I think the difference between those, 
too, is pretty profound.
    Senator Brown. And had incredible consequences.
    Mr. Montgomery. It absolutely had incredible consequences.
    Senator Brown. Yeah.
    Let me ask you something else. Thank you for talking about 
your work 10 years ago and what happened and what we need to be 
cautious about. You spent the past 8 years, Mr. Montgomery, 
helping companies, including some of the largest banks and 
reverse mortgage lenders push back against HUD enforcement 
actions and avoid penalties. You have also served and continue 
to serve on the board of directors for large private companies, 
at least one of which has lobbied us recently as this year on 
the role of FHA.
    Your employer, the Collingwood Group--you and your employer 
both have been highly critical of FHA oversight. You have 
called FHA enforcement of its lending policies using the False 
Claims Act a, quote, ``drone strike,'' unquote, of sorts 
against FHA lenders with devastating results. Your Collingwood 
Group cofounders referred to mortgage reforms enacted in 
response to the 2008 crisis as a regulatory jihad.
    If confirmed, how can we be certain that your work over the 
past 8 years will not influence your oversight of lenders and 
your vision for the FHA programs?
    Mr. Montgomery. Well, thank you for your question. Just to 
be clear, I have not questioned FHA's role, enforcement role. 
The problem has been the Justice Department has stepped right 
in front of the FHA and, quite frankly, in many instances 
pushed them aside, in many instances did not really much care 
about their opinion. The FHA staff had one opinion about 
whether or not a particular loan had some issues with it, but 
the Justice Department stepped in and used the False Claims 
Act. And that is what I was referring to, which has been around 
since the Civil War, to punish contractors selling diseased 
beef or diseased horses, rather, to the Union soldiers.
    We took exception to how it was used 150 years later to go 
after FHA lenders, which in my instance was many times for 
clerical errors. Our firm was involved in some of those cases, 
doing loan file reviews, and many times took exception to what 
the Government was asserting.
    I want to be very clear here. FHA has a role in 
enforcement. What we saw happen was the Justice Department 
stepped right in front of them and quite frankly ran the 
biggest banks, some of which who had been FHA lenders for 50, 
60, 70 years--they no longer offer the product, and I do not 
think that is good for a lot of lower-income first-time 
homebuyers who have a banking relationship with that entity, 
who want to take out an FHA loan, and are told today, ``We 
cannot help you.''
    Senator Brown. I appreciate you have agreed to divest 
yourself of all financial conflicts, if confirmed, but will you 
recuse yourself from any issue involving Collingwood's clients 
or the companies for which you served on the board?
    Mr. Montgomery. Yes, sir. All that is spelled out in my 
ethics agreement, and I will certainly live by everything that 
is required of me, absolutely.
    Senator Brown. Thank you.
    Mr. Kurtz, you spoke passionately about the importance of 
housing for low-income folks in this country, and you mentioned 
only one out of four has affordable, relatively affordable safe 
housing. The Administration's budget proposed large cuts to 
programs you would administer. These include deep cuts to 
public housing capital and operating funds and eliminating of 
Choice Neighborhood grants.
    How do you think these cuts would affect HUD's mission of 
providing safety and affordable housing to current and future 
residents? Public housing, I know you are going to say public-
private partnerships. That is sort of always the answer, but 
can you have public-private partnerships? That is a second part 
of this question, really. Can you have public-private 
partnerships without a major infusion of public involvement and 
public dollars?
    Mr. Kurtz. The budget was an attempt to begin a 
conversation about reforming public housing. We are at a stage 
where I think if we all sat down and created a system to house 
individuals, lower-income individuals, this is really not the 
system that we would create, and there really needs to be an 
attempt to reform it, so it is sustainable for the future and 
sustainable for the individuals living in those homes 
currently.
    Senator Brown. But you honestly think you can--with that 
kind of--the severity and the depth of those budget cuts, we, 
of course, want a new--we want a conversation. We want to look 
at this anew. We want fresh eyes. That is part of the reason I 
voted for--I voted to confirm Secretary Carson, that and his 
knowledge of lead and how lead content affects brain 
development, and it is far too common in low-income homes, low-
income people's homes.
    But how do you--you have that conversation, but how can you 
do this with this kind of a budget when there just are not the 
dollars available for these public-private partnerships?
    Mr. Kurtz. I mean, in any situation where you are looking 
for funding, it is something that we dealt with in Detroit all 
the time. You have got to--you just have to be creative in the 
ways that you find what works. I always refer to it as sort of 
cooking a coup. You put a little bit of this in and a little 
bit of that in. It is all the different pieces.
    So, in some cases, you might not have as much of one, but 
you find other resources and other ways, whether they are on 
the local level or the State level, to try to make up for that 
difference.
    Senator Brown. Well, it helps to have some vegetables and 
meat to actually put in the soup, so fair enough.
    [Laughter.]
    Chairman Crapo. Thank you.
    Ms. Tufts, could you just tell me what your top two or 
three priorities would be in your new role?
    Ms. Tufts. Thank you, Mr. Chairman.
    My overall priority is to reimagine the way HUD works, to 
deliver timely and effective services to our employees, our 
partners, ultimately our customers.
    Within that, there I really see three, three priorities. 
First is to fix our human resource processes so that we can 
recruit, develop, and maintain a highly engaged, high-
performing, and very diverse workforce; second, to improve our 
administrative service so they can operate more effectively and 
intersect more effectively not only with our human resources 
but across our program officers, such as those represented by 
the gentlemen here. The third would be--and this is something I 
am particularly interested in as well--is to look at and 
improve and find creative ways to deal with our physical 
footprint, which is not only in need of serious refurbishment, 
as are indeed many of the housing authorities out in the field, 
but where I am intrigued and I think there may be some great 
opportunities for cost savings. So it is really those three: 
improve HR, improve administrative services, and creatively 
look at our physical footprint.
    Chairman Crapo. Thank you.
    And, Mr. Kurtz, HUD's Rental Assistance Demonstration 
program, or RAD, has emerged in recent years as a great 
opportunity to utilize public-private partnerships to convert 
outdated and dilapidated public housing into units that are 
more livable, safer, and are no longer on the Government's 
balance sheet. Based on your experience, should Congress 
continue to pursue expansions to the RAD program?
    Mr. Kurtz. I believe so. Yes, sir.
    Chairman Crapo. All right. Thank you.
    And, Mr. Montgomery, first of all, I want to follow up on 
Senator Corker's comments. I agree with him that housing reform 
is badly in need, and it is one of our high priorities. And I 
appreciate your comments about the fact that the FHA needs to 
play a role in that as we address the entirety of our needs in 
housing reform.
    I have a question to you, however, with regard to 
litigation. Over the past couple of weeks, Secretary Carson has 
indicated that the FHA plans to work with the Department of 
Justice to clamp down on the number of False Claims Act 
litigation claims brought against FHA lenders for what are 
often harmless or immaterial processing errors. Can you speak 
to the importance of this issue, and what steps do you plan to 
take with FHA to address that problem?
    Mr. Montgomery. Absolutely, Senator. Thank you.
    I--again, just to be clear on this point, fraud and 
misrepresentation has no place in FHA lending, the Quality 
Assurance Division staff at FHA do a tremendous job in that 
respect.
    But when you have many times administrative or clerical 
errors in the manufacture of a loan file--in one case, for 
example, there was missing GIF letters. We saw that fairly 
often. And 7, 8, 9, 10 years later, the borrower defaults 
because he or she lost their job, you know, change in economic 
status, if you will. And the Justice Department comes back and 
says, ``Where is the GIF letter?'' and they said, ``Well, the 
loan went to default because the person lost their job.'' And 
they said, ``Well, you said that this was accurate, that it was 
complete, and there is no GIF letter.'' Again, that is a 
violation of FHA rules, but I do not think it is treble damages 
plus civil, mental--civil money penalties, which is in many 
cases what happened.
    At last count, there were some $5 billion in settlements. 
There is, you know, at least in reading public stories, one 
lender is currently fighting it. A lot of the banks that 
settled were also subject to the FIRREA statutes. I am assuming 
because of that, many of them decided to settle.
    But again, they have all been around the FHA program. They 
probably ask themselves: How do you reserve for the unknown 
times three? And the path to home ownership goes through banks. 
It goes through credit unions. It goes through mortgage 
lenders. You absolutely have to have them. But if the goal post 
keeps getting moved on them, I completely understand why they 
have left the FHA program, but I think they should come back. I 
think all they want is some certainty, ``If I follow your 
rules, you are not going to come back 7, 8, 9, 10 years later 
and say, `You did not do this perfectly. Why is this missing or 
that missing?' '' And we have seen what has happened as a 
result of that.
    Chairman Crapo. All right. Thank you.
    And just finally, in my last 30 seconds, back to housing 
reform. As I indicated, housing reform continues to be a top 
priority for us, this Congress, and as we examine these 
opportunities as to how to deal with Fannie and Freddie and 
terminate the conservatorship and how to deal with the FHA, I 
would just like your commitment to work with us and our staff 
on this to help us to get to the answer and to get there 
quickly.
    Mr. Montgomery. If confirmed, I will absolutely provide 
whatever assistance I can. Thank you.
    Chairman Crapo. Thank you.
    Senator Tester.
    Senator Tester. Yeah. Thank you, Mr. Chairman and Ranking 
Member Brown.
    I want to go back to the affordable housing programs. Both 
Mr. Montgomery and Mr. Kurtz spoke about the need for 
affordable housing programs. I am sure you have taken a look at 
the Trump budget, which would eliminate home funding, Housing 
Trust Fund, CDBG funding.
    To put this from a Montana perspective--and it is has to 
make blank statements, but I think I could make a pretty solid 
statement that any community over 8,000 people in Montana needs 
affordable housing. And it stopped the ability for economic 
development. It has stopped the ability to hiring new people so 
existing businesses can expand. It stops the ability to recruit 
new businesses to a town.
    So the question becomes--you guys said all the right 
things, and by the way, this budget, I would say came from 
President Trump but was shepherded by Dr. Carson. And he said 
some things--and I voted for his confirmation too, but he said 
some things since his confirmation that makes me wonder if his 
heart is really in housing or if it is in education. For 
example, when he came to Montana and talked to the Indian 
tribes--and we were glad to have you there, Mr. Kurtz--housing 
was not even talked about. It was talked about education.
    And so the question becomes how do you guys--because I 
think both of you want to see an effective affordable housing 
program. How do you do that when potentially the two guys above 
you are not really bought into it?
    Mr. Montgomery. I could go first. Well, thank you for your 
question.
    As a private citizen, obviously I was not involved in the 
development of that budget.
    Senator Tester. No, no.
    Mr. Montgomery. But I can speak previously when I served in 
this capacity. I can very much assure this Committee had a lot 
of input into the budget, and there were some things throughout 
the budget-making process back then I did not agree with, 
particularly cuts to 202 and 811----
    Senator Tester. Right.
    Mr. Montgomery. ----which I fought vociferously for. And if 
confirmed, I will do that again.
    Senator Tester. And so the question really becomes--is what 
happens if your boss comes down and says, ``You know what?''--I 
am talking about Dr. Carson or even the President comes down 
and says, ``You know what? We do not want you to invest any 
money in affordable housing,'' because that is what that budget 
says. What do you do?
    Mr. Montgomery. Well, I will tell this Committee that I 
will make sure--I will advocate my position strenuously, but at 
some point, if you do not get what you need, you just have to 
go forward and do what you can.
    Senator Tester. Mr. Kurtz, do you want to respond to that 
too?
    Mr. Kurtz. Sure. Working with Secretary Carson in my 
current position, I do believe that he is an advocate of 
housing. He is--you know, it is a subject of conversations 
always, what we deal with on a day-in-and-day-out basis.
    But at the same time, he does see that there is--you know, 
I think it comes from his medical background. You cannot just 
look at the one symptom. You have to look at the patient as a 
whole, is how he likes to describe it, and working to not just 
provide housing, but the wraparound services that we need to 
provide to ensure that we can graduate people out of public 
housing.
    You know, it goes back to the comments I was making on that 
we are only housing a quarter of the people eligible.
    Senator Tester. I gotcha, but here is the problem in the 
communities that I talked about in Montana. There is no 
housing. There is no affordable housing. None, zero, nada. 
People want to buy it. They cannot buy it because, quite 
frankly, there is none.
    And so the real question is if we are going to have 
economic development, if in fact we are going to move the 
economy forward, a lot of these communities--and they are small 
communities by U.S. standards--need help. It is not going to 
happen without the Federal Government providing some sort of 
assurances that they can move forward.
    So the question becomes--I hear what you are saying, but I 
think this is a different issue. I think this is affordable 
housing. There are customers there for it if you can get it 
built, and quite frankly, these programs, if in fact they end 
up zeroed out, are not going to address that issue of 
affordable housing.
    Mr. Kurtz. I mean, it--one of the other questions I was 
answering earlier, you know, in my experience in the city of 
Detroit, we never--there was never enough resources. We were 
always having to come up with new ways to come up with 
resources.
    Senator Tester. I gotcha.
    Mr. Kurtz. And, you know, public-private partnerships, 
creative opportunities with nonprofits, these were things we 
were always trying to develop and use.
    Senator Tester. I just do not--and I will just tell you, in 
this budget the President put forward--and it is why I think 
that you guys need to push back hard, and I heard Mr. 
Montgomery say he would, and I hope you will, too, Mr. Kurtz--
that you are not going to get blood out of a turnip. It really 
is going to require somebody that advocates and knows what they 
are doing.
    In Indian housing--and I appreciate you being in Montana, 
Mr. Kurtz, but very quickly--and this is not--however you 
answer this does not matter. I just want to know. Have you had 
a chance to take--you were dealing with large land-based tribes 
in Montana. Have you had a chance to visit some of the tribes 
across the country to see what their housing needs are?
    Mr. Kurtz. I have not, and if confirmed, it is something I 
want to do.
    Senator Tester. We would be more than happy to try to help 
you with that in Montana if we can set up connections for you.
    Thank you, Mr. Chairman.
    Mr. Kurtz. Appreciate it.
    Chairman Crapo. Thank you.
    Senator Kennedy.
    Senator Kennedy. Thank you, Mr. Chairman.
    Congratulations to all three of you.
    I would like you to help me figure out a problem. In 
Louisiana, we, of course, have an affordable housing program, 
as does every State, and we use Federal tax credits. And there 
is public-private partnership that I think has worked 
beautifully, in my judgment, but it is not perfect. And here is 
one of the problems I see in my State and in other States.
    And let me preface my explanation, the problem, by saying 
here is my goal--to take hard-earned taxpayer dollars and get 
as many people as we can who need help into decent, 
comfortable, affordable housing.
    Here is the problem. Many State housing boards that 
administer these credits, they want to help those of our 
citizens, as do we all, who are less fortunate than we are, and 
in doing so, the standards for the housing become higher and 
higher and higher. In other words, they make private developers 
compete for the credits. Are you following me so far?
    And a lot of the private developers, in order to get 
support from the local housing boards, add things like granite 
countertops, a lot of amenities that are wonderful to have, but 
they cost money. They use up credits.
    We have seen projects in Louisiana on occasion at 2-, 3-, 
$400 a square foot for affordable housing, and I am sitting 
there doing the math. And I am figuring, well, let us see. We 
can help 10 people with $400 a square foot. How many people 
could we help at $200 a square foot? Now, $200 a square foot is 
not as nice as $400 a square foot, but it is not chopped liver. 
How do we solve this problem?
    I am not faulting anyone, but my interest is helping as--
stretching those dollars and helping as many people as we can, 
and we can help a lot more if we would be a little reasonable.
    I would like your thoughts on that, starting down--let me 
start with this nominee first.
    Ms. Tufts. Senator, thank you.
    I am going to--I am focusing mostly within HUD on a similar 
kind of thing, which is the administrative services and the 
physical plant and how do we have places like the Weaver 
Building, which is historical and has all sorts of regulations 
around it and yet has fallen so far down, and it is really a 
morale crusher, to be frank, in terms of the quality of what we 
can deliver as far as the workforce.
    And yet, hopefully, I will be confirmed and I will be 
digging into the budget to see what is there available and what 
is the right level of excellence and of morale and workplace 
excellence that does not exceed and does not have the taxpayers 
in your State saying, ``Why are you spending all this money on 
people in Washington?''
    So I hear you exactly in terms of what the tension is, but 
I think I am going to take the easy way out, sir, and defer to 
my colleagues who are in the program offices and who know about 
the funding and the regulations.
    Mr. Kurtz. You know, I am obviously a fan of just building 
as much affordable housing as possible. You know, we--as I 
mentioned earlier, we are only----
    Senator Kennedy. Keep going.
    Mr. Kurtz. We are only housing a quarter of the individuals 
that are eligible for public--or affordable housing, and, you 
know, anything we can do to expand the amount of affordable 
housing available is a good thing.
    Mr. Montgomery. I am not familiar, Senator, obviously with 
Louisiana. I will be.
    But in terms of a tool, the Low-Income Housing Tax Credit 
has received broad bipartisan support. I understand there is a 
bill to actually increase the tax credit 50 percent. It works 
very well with FHA programs, certainly with the multifamily 
programs, the subsidy layering requirements, and obviously with 
the Rental Assistance Demonstration program.
    I agree we should be able to stretch those dollars and try 
to develop as much housing as possible.
    Senator Kennedy. I support the credits, but they did not 
just fall from heaven.
    Mr. Montgomery. Absolutely.
    Senator Kennedy. We thank heaven for them, but they came 
out of people's pockets, taxpayers. And I sure would like your 
help in stretching those dollars.
    Mr. Montgomery. Absolutely.
    Senator Kennedy. Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chairman.
    Welcome. Thank you all for your willingness to serve and 
then serve again, and welcome to your families, beautiful 
families, and very impressed they have all been sitting there 
very quietly and listening to this exciting conversation.
    Let me just start with Mr. Montgomery. I want to jump back 
to some of the conversation that I have heard with respect to 
FHA and False Claims, and the reason I ask is because I need a 
little bit more clarification. I am hoping you can help me.
    So when I was Attorney General in Nevada, 48 of my 
colleagues and I settled a $25 billion lawsuit with the 
Nation's largest banks to address their egregious behavior 
related to mortgage servicing, robo-signing, and foreclosure 
abuses. That settlement included nearly $1 billion being 
returned to the taxpayers for fraud upon the FHA under a False 
Claims case.
    Are you saying that that particular settlement, there were 
clerical errors that should have been in there that should have 
not been undertaken under the False Claims Act by DOJ?
    Mr. Montgomery. So just to make sure I understand the 
question, the State Attorney General settlement, I think was 
right and proper. There were certainly a lot of abuses that, by 
the way, the FHA had no role in.
    Senator Cortez Masto. OK. So thank you, because I am trying 
to understand what you identify as a clerical error.
    So also, I also know that some of the biggest banks that 
have been driven out of FHA lending did not engage in clerical 
errors and loans sold to FHA. For example, I also am aware of 
the settlement the U.S. Government had in the New York 
settlement with Wells Fargo that alleged systemically lacks 
underwriting standards and compensation systems that incented 
churn over quality. Also, Wells Fargo failed to self-report bad 
loans sold to HUD and uncovered in internal quality assurance 
reviews. Are you saying those are not clerical errors, those 
are severe that should have been brought under False Claims?
    Mr. Montgomery. Just to be clear, when there are material 
errors, certainly, there has been misrepresentation. Those are 
not administrative clerical errors.
    Senator Cortez Masto. So the one example that you cited, 
that there was a GIF letter missing, are you telling me that 
that was the one area, that was the one piece of evidence, a 
GIF letter was missing, and that particular bank then was 
charged under the False Claims Act and found guilty because of 
that missing GIF letter?
    Mr. Montgomery. Well, we many times saw that. The 
Government would assert that would be a material error.
    Senator Cortez Masto. Is that the only? Is that the only 
material, or were there others?
    Mr. Montgomery. No, there might be slight errors in 
computation, computing, rather, income.
    Again, my issue is not that those are not errors that the 
lenders should certainly fess up to, pay a penalty or whatever. 
My only concern was the use of the False Claims Act as a tool 
to go after them, that, quite frankly, a lot of them--again, 
these were loans that had been paid on for years, and because 
there was no GIF letter 8 years ago, if the loan goes to 
default because the person loses their job, the Justice 
Department came back and said, ``Where is the GIF letter?'' To 
me, there is no connection between the two.
    Senator Cortez Masto. No. And I guess maybe we can--I can 
explore this a little bit further with you. A False Claims 
action was brought just because of a missing GIF letter, or 
there were other areas that they----
    Mr. Montgomery. Oh, certainly, there were other areas.
    Senator Cortez Masto. OK. That is what I thought.
    So I understand from a Bloomberg article that Secretary 
Carson said the FHA and Justice Department are working to 
clarify the rules so banks will not have to fear retaliation, 
and the changes would let lenders avoid penalties for 
immaterial errors.
    Are you going to be involved in identifying those rules and 
working with DOJ?
    Mr. Montgomery. Well, certainly, if I am confirmed, I would 
hope that I have input into that process.
    Senator Cortez Masto. Have you had conversations with 
Secretary Carson now or previously particularly in this 
instance when he spoke to the Mortgage Bankers Association?
    Mr. Montgomery. I did not speak to him before he talked to 
the Mortgage Bankers----
    Senator Cortez Masto. You have not had any conversations 
with him regarding this particular position?
    Mr. Montgomery. Oh. I spoke to him--I believe it was in 
late December.
    Senator Cortez Masto. OK. I absolutely have concerns about 
what you identify as a clerical error and what you are looking 
at because, listen, as Attorney General, False Claims Act came 
through my office. I was the only one that could allow them, 
and I can count on one hand how many times we went False Claims 
Act. And I have worked with the DOJ. The only time this is 
brought is because there is egregious activity, not clerical 
errors that may be in part of it, but there is egregious 
activity going on. And so I am very curious to see how you guys 
are going to drill down on this and would like to work with you 
to understand what you identify as a clerical error.
    So I would appreciate working with you on that.
    Mr. Montgomery. Absolutely, Senator, I will do that. Thank 
you.
    Senator Cortez Masto. Thank you.
    Mr. Kurtz, Nevada, like everyone else I am hearing, has 
affordable housing problems, and we need help. The Trump budget 
cuts are not going to help any of us, as you have heard.
    And I know my time is running out. I am going to submit for 
the record to you some concerns I have with not only affordable 
housing, the cost, and helping us in our communities, but what 
you can do to really be an advocate for more funding that is 
needed.
    So I appreciate your willingness to work, and I hope you 
are willing to work with all of us to address these needs as 
well.
    I know my time is up. The rest of my questions, I will 
submit on the record. Thank you.
    Chairman Crapo. Thank you, Senator.
    Senator Schatz. Thank you, Mr. Chairman.
    Thank you to all of you for your willingness to serve, and 
thanks to all the families. I appreciate your willingness to 
let them serve.
    Mr. Montgomery, in your testimony, you discussed FHA's role 
in addressing the housing supply crisis. This issue is acute 
for low-income households across the country, but in Hawaii, 
all but the highest-income households are affected. What 
specific steps should FHA take to spur rental housing 
construction, and what barriers does the Office of Housing face 
in creating more housing opportunities?
    Mr. Montgomery. Thanks for your question.
    Obviously, you have heard me in my opening statement 
reference the worst-case housing need, 8.3 million families 
currently not receiving assistance, paying more than half of 
their income in rent. That number is too high. There are not a 
lot of tools FHA currently has to develop new housing.
    As I referenced the tax credit earlier, in my opinion, I 
think that program needs to be increased because it is 
absolutely a great tool that works well with the FHA programs, 
and we have to hold onto what we have. Preservation is a key 
tool, and when some of these use agreements expire, many owners 
in the case of project-based rental assistance have the 
opportunity to opt out. And I think we need to make sure we 
provide incentives so that they do not do that.
    We already do not have enough affordable rental housing, 
and as the home ownership rate went down and the inventory 
obviously fell, that put pressure--or rather the market-rate 
units that were being developed, no one was building much 
affordable housing during that time, and it has manifested 
itself in higher rents as well for everyone. So the two 
definitely go hand in hand.
    Senator Schatz. Do you want to talk about the Multifamily 
for Tomorrow Transformation effort at HUD in terms of how well 
it is going and if you plan to continue it?
    Mr. Montgomery. Well, the Rental Assistance Demonstration 
program is certainly a big of that--a big component of that. 
The previous Administration should be commended--and Congress 
for working with them on it and certainly in raising the cap as 
well.
    There is a $26 billion infrastructure hole on a lot of the 
Nation's public housing, and I think the RAD program goes a 
long way to help filling that.
    I do want to make sure I add, though, that tenant 
protections are certainly important in that. The tenants need 
to make sure that they are well informed of what is going on 
and that they have a voice in that process as well.
    Senator Schatz. Do you plan to continue the Multifamily for 
Tomorrow Transformation effort at HUD?
    Mr. Montgomery. Yes. That is my current plan.
    Senator Schatz. OK. That is your current plan.
    Mr. Montgomery. Well, I am a private citizen.
    Senator Schatz. Sure.
    Mr. Montgomery. Absolutely. Once I get in there, obviously 
there is a lot of programs to look at, but I absolutely will do 
whatever I can to help increase the supply of affordable 
housing.
    Senator Schatz. Thank you.
    Mr. Kurtz, thank you for your willingness to serve earlier 
this year.
    HUD released a report detailing the housing needs of Native 
Hawaiians. The report indicated the affordable housing crisis 
is particularly acute among Native Hawaiian. The report--which 
I would like with the Chairman's permission to submit for the 
record----
    Chairman Crapo. Without objection.
    Senator Schatz. ----also states that the Federal Government 
has a unique Federal trust responsibility to Native Americans, 
including American Indians, Alaska Natives, and Native 
Hawaiians [https://www.huduser.gov/portal/publications/housing-
needs-native-hawaiians.html].
    Given the existence of that special legal responsibility, 
what steps do you plan on taking to improve housing outcomes 
for Native Hawaiians, Alaska Natives, and Native Americans?
    Mr. Kurtz. Specifically to the Native Hawaiian programs, I 
know there is a bit of a backlog in the funding that they have, 
and it is very reminiscent of my time in the city of Detroit. 
We were a housing department with a lot of funding--or 
expenditure issues in trying to spend the funds.
    I am a big believer in having both the field office and 
technical assistance provided to those folks to try to remove 
barriers that they may be facing. It has to be a team effort, 
and if confirmed, I hope to work to try to address those 
issues.
    Senator Schatz. Thank you.
    My last question is for Mr. Montgomery. One of the first 
acts of this Administration was to stop a reduction in a 
mortgage insurance premium. I understand you do not want to 
speak to the specifics of the MIP rate. I would like to 
understand your position on the goal of the premium, generally 
the MIP.
    The Mortgage Insurance Fund capital ratio is now well above 
the statutorily mandated levels, and the current premium will 
continue to strengthen the fund's capital position. So do you 
think that the goal of MIP should be to provide the fund with 
adequate capital reserves to provide a profit for FHA or to 
influence consumer behavior?
    Mr. Montgomery. Well, I am certainly familiar with the 
premium reduction. The capital ratio is going to be released in 
a few weeks. I do not know what it is going to be. I suspect it 
will continue its upward trend, but the last actuary review, I 
think it was about 2.36 percent. As a comparison, when I was 
Commissioner, it averaged almost 5.6 percent during my tenure.
    And the totality, I think, as I mentioned before, we need 
to look at the FHA program from an LTV perspective, from loan 
limits, and absolutely from a premium perspective. There should 
be flexibility on the up-front, on the annual loan limits, 
whatever--to me, it is part of an overall discussion. But I 
think there needs to be--at the proper levels, we make sure we 
protect taxpayers.
    Senator Schatz. Thank you.
    Chairman Crapo. Thank you.
    Senator Warren. Thank you, Mr. Chairman.
    So, Mr. Montgomery, you have been nominated to run the FHA, 
and FHA provides taxpayer-backed mortgage insurance, helps 
millions of Americans buy homes they might not otherwise be 
able to afford, and unless it is managed well, though, of 
course, the FHA can expose taxpayers to risk of billions of 
dollars in losses, so very important position here.
    You have run FHA before, and now you want to go back and do 
it again. And I want to pick up on Senator Brown's question 
about what you have been doing since then. Your bio says you 
served as Commissioner of FHA from 2005 until mid-2009. What 
month did you leave?
    Mr. Montgomery. If memory serves correct, I think I left on 
July 2nd, 2009, a Friday.
    Senator Warren. OK. I think Bloomberg thinks it is July 
15th, 2009, but does that sound about right?
    Mr. Montgomery. It was early July.
    Senator Warren. OK.
    Mr. Montgomery. It was not quite 6 months.
    Senator Warren. And what month did you officially start a 
new company called Collingwood Group?
    Mr. Montgomery. It was about a month later.
    Senator Warren. About a month later.
    So 1 month after leaving FHA, you founded and became vice 
chairman of this new company, and according to the Bloomberg 
story, your company was, quote, ``known in the housing finance 
industry as a specialist in helping firms navigate FHA-related 
penalties and lawsuits.''
    Now, Wells Fargo was a client of yours; is that right?
    Mr. Montgomery. Yes, Wells Fargo was.
    Senator Warren. Uh-huh. And in 2016, Wells Fargo paid $1.2 
billion for defrauding FHA, and as part of the settlement, 
Wells Fargo admitted that it had, quote, ``certified to the 
Department of Housing and Urban Development, HUD, during the 
period from May 2001 through December 2008 that certain 
residential home mortgage loans were eligible for FHA insurance 
when, in fact, they were not, resulting in the Government 
having to pay FHA insurance claims when some of those loans 
defaulted.''
    Now, your company was known for helping firms navigate FHA 
penalties. Your company had Wells as a client. So did your 
company advise Wells in conjunction with the 2016 settlement 
with FHA?
    Mr. Montgomery. So that is a lot of questions, Senator, but 
just to back up for a second, the Collingwood Group existed 
before I joined the Collingwood Group. We just renamed the name 
of the company that it was.
    Senator Warren. So you do not call yourself a founder.
    Let me just get to the question, though. My time will run 
short. Did your company advise Wells in conjunction with the 
2016 billion-dollar settlement with the FHA?
    Mr. Montgomery. So our firm was involved in helping the law 
firm that was representing Wells Fargo. I personally was not 
involved.
    Senator Warren. So I just want to make sure I have this 
right. You were the head of the FHA when Wells Fargo submitted 
thousands of fraudulent mortgages to FHA and cost the 
Government millions of dollars, and then soon after leaving 
FHA, you join this company making money advising Wells Fargo on 
how to pay back the Government as little as possible for 
defrauding the agency that you ran.
    Now, let me ask another one. Mr. Montgomery, was U.S. Bank 
also a client of yours?
    Mr. Montgomery. So, by the way, there is about 5-year gap 
in there between me leaving and us doing work for Wells Fargo. 
Again, I was not involved in that case.
    Senator Warren. But you did not pick up Wells Fargo as a 
client until 2016? Is that what you are trying to say?
    Mr. Montgomery. I am just guessing it was about 5 years 
later, but again, I personally was not involved in that case, 
myself----
    Senator Warren. But the period of time it settled is the 
period of time that involves when you were the head of the FHA.
    Mr. Montgomery. I would have to go back and read the 
settlement, but again, I was not involved in that.
    Senator Warren. You can read the settlement. We know when 
you were the head of the FHA, and we know that the Wells Fargo 
settlement covers the period that you were the head of the FHA. 
So I am asking if U.S. Bank was also a client if yours.
    Mr. Montgomery. U.S. Bank was, but that had nothing to do 
with the False Claims Act.
    Senator Warren. Well, I am not asking about False Claims. I 
am asking about what happened while you were running the FHA 
program because in 2014, U.S. Bank paid $200 million for 
defrauding FHA, and in its settlement, it admitted, quote, 
``from 2006 to 2001,'' it repeatedly certified of FHA insurance 
mortgage loans that did not meet HUD underwriting requirements.
    Did your company advise U.S. Bank in conjunction with this 
settlement?
    Mr. Montgomery. I believe we helped look at loan files, as 
I mentioned to you yesterday. The Government asserts material 
weaknesses. A lot of what we did was look at loan files, which 
they have a right to defend themselves.
    Senator Warren. Well, they certainly do have a right to 
defend themselves, and somebody built a business defending them 
to help them defend themselves.
    I would just like to ask. I know I am out of time. I would 
like to ask you to provide the Committee with a list of the 
clients that your company advised on FHA-related penalties and 
settlements during the time that you were heading up the FHA 
and the time that you were with this company.
    You know, I have seen some amazing cases of spinning 
through the revolving door, but this one really might take the 
cake. This is someone who has run an agency that puts taxpayer 
money on the line, and while there, evidently does not do 
enough to stop big banks form submitting fraudulent mortgages, 
cost the Government millions and millions of dollars, then 
waltzes right out the door and makes money advising those same 
banks about how to pay back the Government as little as 
possible for the frauds committed on his watch. And now we are 
talking about going back and doing it all over again.
    Mr. Montgomery may have the best of intentions, but we can 
never expect the American people to trust Washington if this 
kind of revolving door continues.
    So I hope that we will reject this nomination.
    Thank you, Mr. Chairman.
    Mr. Montgomery. I would like to respond to that, if I 
could.
    Senator Warren. Please do.
    It is the Chairman's time.
    Mr. Montgomery. Let me just----
    Senator Warren. But if he responds, will I have time to 
respond?
    Mr. Montgomery. I am prepared to discuss this topic all 
day, Senator, if you like.
    Senator Warren. So am I.
    Mr. Montgomery. Just let me be very, very clear. The 
Government assets one thing in the False Claims Act cases that 
there is X number of files that, you know, claims were paid on. 
They extrapolate that number across the entire book of 
business, by the way.
    These clients and their law firms asked us to come in there 
and said, ``Is what the Government asserting correct?'' Again, 
they have a right to defend themselves and to respond.
    In many cases, the Government was not wrong, and the 
Government knew they were not wrong. In one instance, the 
Government said $400 million in damages. We went and did the 
loan file reviews, and guess what? It was more like $125 
million. Sure, they paid $125 million settlement, but that is a 
long way from $400 million.
    Again, I just want to be clear. They have a right to say, 
``Government, you were not correct in this instance,'' and they 
said, ``You are right.'' And that is why they paid a much 
smaller settlement.
    Chairman Crapo. Senator Warren, you can have the last word, 
but please be brief.
    Senator Warren. I will be brief because I think somehow we 
may be talking past each other.
    Mr. Montgomery. I hope we are not.
    Senator Warren. My concern is that you were the head of the 
FHA. It was your responsibility to see to it that standards 
were set so that these banks did not file false claims, and 
then as soon as you leave the FHA, you go to a business whose 
job it is to make sure that these banks, who have broken the 
law, pay as small a penalty as possible. And now you want to 
come back to the FHA and run it again. This is the classic 
revolving door. In fact, it is worse than the classic. It is 
the revolving door at its worst, and the American people cannot 
have confidence in our Government so long as the revolving door 
is spinning like this. That people work in Government and then 
go make a profit off the times they worked in Government, this 
just is not right.
    Thank you, Mr. Chairman.
    Chairman Crapo. Senator Warner.
    Mr. Montgomery. I just think we should do what is fair, and 
that is all we were trying to do, Senator.
    Chairman Crapo. Senator Warner.
    Senator Warner. Thank you, Mr. Chairman.
    Mr. Montgomery, where have all these--but, Mr. Montgomery, 
as somebody who wants to give you a fair shot, I want to make 
sure I get all this information as well, so I can----
    Mr. Montgomery. Thank you, Senator.
    Senator Warner. ----do my own independent review.
    I want to start with just making a comment that a number of 
us on this Committee on both sides of the aisle have felt for a 
long time that one of the last remaining places in terms of a 
need for financial reform is housing finance and have spent, as 
I have--with my friend, the Senator from Massachusetts, and the 
Chairman and the Ranking Member, you know, I know more about 
housing finance than I ever wanted to know. But I still do 
believe that we are--that the current status of the GSEs being 
in conservatorship is not the long-term solution. It is my hope 
still that this Committee in a bipartisan way will take on 
housing finance reform, that we will do it in a way that allows 
competition in the private market and in a way that allows 
risk--appropriate risk transfers to those first dollar losses, 
and whether that is 4 percent, 6 percent, 8 percent, 10 
percent, those are all fair items to debate.
    But also that we have a program that has a clearly 
identifiable strip or fee that would help support low-income 
first-time homebuyers, renters, and others because clearly 
access to housing in this country--and I know you all share 
this view that it is extraordinarily important.
    So again, I am hopeful we are going to make some progress, 
and should you be confirmed, Mr. Montgomery, would look forward 
to input and trying to work through this issue.
    Let me move from some of the subject matter that Senator 
Warren was talking about to something that is a bit more 
mundane but is an area that I think is in desperate need of 
review should you be confirmed, and that is the fact that the 
IT systems at FHA--or many of them, I think, are still running 
cobalt. It appears to me that the efficiency of FHA is 
seriously undermined by the lack of having a modern IT system.
    I often point to the fact that if the Federal Government 
spends $88 billion on IT, 75 percent of which is mostly just on 
patches rather than ever junking some of our legacy systems.
    I would like you to talk about where IT reform would fit 
should you be confirmed, and unfortunately, because of some of 
the rules around FHA funding, it feels to me like we do not 
provide FHA with an adequate revenue stream to make the kind of 
repairs to their IT system that would bring them into the 21st 
century, that would actually then perhaps allow particularly 
more low-income and first-time homebuyers be able to access FHA 
services.
    So if you could speak to that, I would appreciate it.
    Mr. Montgomery. Absolutely.
    In my previously capacity as Commissioner, I used to joke 
that we need to bring FHA technology into the late '90s. I 
think that is still the case, by the way, bring it in the late 
'90s.
    In fairness to the previous Administration, they actually 
created a system around what is called Defect Taxonomy and 
rolled out the Loan Review System after several years. They 
should be commended for that effort, but there is much more 
areas where FHA needs help.
    CHUMs, which is the backbone I mentioned before, I believe 
runs on a Wang mainframe.
    The CAIVRS system is antiquated. The ability to properly do 
asset management around the single-family inventory is an old 
system.
    As I referenced before, I had the opportunity to hear some 
of things Fannie Mae has done around the Day 1 Certainty 
program. Good for them, but my guess, they are probably 25 
years ahead of where the FHA is today from a technology 
perspective. It is one of the most critical issues.
    Senator Warner. Say that--say that last sentence again. You 
are saying Fannie Mae is about 25 years behind FHA, or FHA is 
behind?
    Mr. Montgomery. No, I am guessing Fannie Mae, based on what 
I have seen, is 15, 25 years ahead----
    Senator Warner. Yes, that is what I thought.
    Mr. Montgomery. ----of where the FHA is.
    Senator Warner. Right.
    Mr. Montgomery. And again, by the way, good. Good for them. 
I am glad they are modernizing their technology, but if you 
want FHA to be a part of the housing finance system in America, 
they need the proper tools.
    Senator Warner. And also, when we get into these areas 
around--litigation around False Claims Act and trying to make 
sure that the Government is protected, I would argue that 
outdated old technologies can sometimes lead to some of these 
mistakes, and that upgrading that technology could bring more 
transparency on both sides. How do you get the funding stream 
to do that?
    Mr. Montgomery. Well, I just want to respond real quick to 
what you said. Absolutely, it can give you more visibility if 
it is a data-centric architecture. It would give the Inspector 
General more visibility, for example, in a real-time 
perspective.
    FHA and Ginnie Mae generate billions in receipts that are 
currently scored against the HUD's top-line budget. I believe 
the last budget is somewhere between $7 and $9 billion. It 
would be nice if they could keep some of that for themselves, 
FHA and Ginnie Mae, to modernize the systems because they are 
critically behind where the GSEs are today. It is----
    Senator Warner. Now, would that require----
    Mr. Montgomery. ----a completely an unlevel playing field.
    Senator Warner. I know I am going--just one last question 
on this, but since my colleagues went over, is that--and let me 
show my ignorance here. Would that require a legislative 
change, or could that be done actually from a commissioner 
level?
    Mr. Montgomery. Senator, I believe it will require a 
legislative change.
    Senator Warner. That is what I thought as well. That is 
what I thought as well.
    But my hope would be, Mr. Chairman and Senator Brown, 
that--not sexy, this issue, but when you have got these old 
outdated IT systems in an area where, frankly, we can improve 
efficiency, we could provide better service to FHA's customers, 
there may be another ability to use this data in obviously 
privacy-protected ways, that, frankly, there is an enormous, 
enormous asset there that we are not taking advantage of. And I 
would hope that we could find some commonality on getting the 
agency the revenues they need to make the upgrades. They are 
way overdue.
    Chairman Crapo. Good points.
    Senator Warner. Thank you, Mr. Chairman.
    Mr. Montgomery. Thank you, Senator.
    Chairman Crapo. Thank you, Senator Warner.
    And that concludes the questioning. I once again thank our 
witnesses for your willingness to serve and for being here 
today for this hearing.
    I would like to inform you that you will probably receive 
additional questions from the Senators. I advise the Senators 
that those questions must be submitted by the end of business 
on Wednesday, November 1st, and then we would ask our nominees 
to respond to those questions by the following Monday, November 
6th.
    And once again, thank all of you for being here today, and 
that concludes our business.
    This hearing is adjourned.
    [Whereupon, at 11:22 a.m., the hearing was adjourned.]
    [Prepared statements, biographical sketches of nominees, 
responses to written questions, and additional material 
supplied for the record follow:]
               PREPARED STATEMENT OF BRIAN D. MONTGOMERY
 To Be Assistant Secretary for Housing, Federal Housing Commissioner, 
              Department of Housing and Urban Development
                            October 26, 2017
    Thank you Chairman Crapo, Ranking Member Brown, and Members of the 
Committee, I am honored to appear before you today and to once again be 
considered to serve as HUD's Assistant Secretary for Housing and 
Federal Housing Commissioner.
    I am grateful to President Trump and Secretary Carson for their 
confidence in my abilities to serve in such an important position.
    If I could, I'd like to take a moment to introduce my wife Katy and 
my daughter Emily and son Thomas, and thank them for being here with me 
today.
    Mr. Chairman, I was humbled by the confidence this Committee placed 
in me 12 years ago and sincerely hope I earned your trust while serving 
as FHA Commissioner from 2005 to 2009 including 6 months into the Obama 
administration.
    Some of my Republican friends and colleagues still ask why I agreed 
to serve in a Democratic Administration and my answer has always been 
the same: ``they asked for my help.'' It was that simple.
    Now when I'm asked why I would want to return to HUD, the answer is 
just as simple: ``I believe I can make a positive difference.''
    Public service is an honor, one I take seriously, and if confirmed, 
I will again do my best to further equal access to affordable rental 
and home ownership opportunities, and seek solutions to restore 
vitality to the housing market.
    During my tenure at HUD, I'm proud of the work we did to preserve 
FHA as a viable option for homebuyers. Working collaboratively with 
this Committee, we were able to pass the Housing and Economic Recovery 
Act of 2008, or HERA.
    That legislation placed FHA on sounder financial footing by kicking 
out the seller-funded downpayment schemes that were hurting borrowers 
and decimating the FHA Insurance Fund of more than $15 billion in 
losses according to the FHA Actuarial Review contractor.
    We were also able to expand home ownership opportunities by giving 
borrowers, especially minorities and first-time homebuyers, a safer 
option that the subprime loans that were so prevalent at the time.
    FHA played no role in the housing boom or collapse, but it was FHA 
that stepped in and provided more than $1 trillion in mortgage 
liquidity that helped more than 8 million families purchase or retain 
their homes between 2008 and 2012.
    I'm extremely proud of the effort of the FHA staff who also further 
proved the critical role FHA plays during housing downturns.
    Putting an exclamation point on FHA's storied role, a well-known 
economist said in 2011: ``if FHA lending had not expanded after private 
mortgage lending collapsed, the housing market would have cratered, 
taking the economy with it.''
    Nearly 10 years after the housing collapse, there is still much 
more that needs to be done. The home ownership rate today is roughly 
the same as it was in 1968, and there is a profound lack of affordable 
rental housing in too many communities.
    In fact, HUD's latest ``Worst Case Housing Need'' report released 
in August 2017 indicated that in 2015 more than 8.3 million lower 
income renter households not receiving housing assistance paid more 
than half their income in rent.
    And while the housing market continues to recover, far too many 
credit-worthy borrowers--many of them prospective first-time homebuyers 
including minorities and young families--are being left out.
    The Urban Institute has estimated that more than 6 million more 
mortgages would have been made between 2009 and 2015 if credit 
standards had been similar to the reasonable ones in place in 2001, 
well before the housing boom.
    One reason for the tight credit environment is that lenders remain 
hyper-sensitive about defaults and claims out of fear of heavy-handed 
enforcement actions. To be clear, fraud and misrepresentation have no 
place in any industry much less the one that represents the largest 
investment most families will ever make, but I wonder if we haven't 
gone too far.
    We must do a better job of providing regulatory clarity to mortgage 
lenders. It's time we treat them more like business partners than 
adversaries.
    Another key part of FHA's mission is supporting safe and affordable 
rental housing. During my previous tenure as FHA Commissioner, we made 
unprecedented changes to leverage private capital with Federal 
resources in order to increase the supply of quality rental housing for 
people with limited incomes.
    I was pleased to see Secretary Donovan and his team continue to 
support this important objective and greatly expand it. But, as rental 
housing cost burdens grow and worst-case housing needs remain unmet, 
clearly there is more work that needs to be done.
    I also believe the role of nonprofit housing organizations who are 
at the forefront of developing housing solutions could be better 
utilized.
    Another high priority, if I'm confirmed, will be to address FHA's 
outdated IT systems.
    While the GSEs have spent millions of dollars upgrading their 
technology, FHA is still looking for loose change under the sofa 
cushions. That has to end.
    FHA and Ginnie Mae generate billions in receipts and I strongly 
believe must make investments to fund IT improvements.
    Doing so will help reduce the financial risk to taxpayers and 
ensure that FHA can operate on a stable platform for years to come.
    Finally, I want to give you my pledge that we will do everything we 
can to help the people impacted by the hurricanes that ravaged my home 
State of Texas, as well as Florida, Puerto Rico, the Virgin Islands, 
and the recent wildfires in northern California.
    I'm no stranger to disaster recovery, having experienced first-hand 
the rebuilding process following Hurricanes Katrina and Rita. I know 
the HUD staff continues to work hard to help those displaced or 
otherwise impacted by the recent barrage of natural disasters.
    I'd like to thank the Committee for your time today, and 
consideration of my nomination to serve as FHA Commissioner. I look 
forward to your questions.



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               PREPARED STATEMENT OF ROBERT HUNTER KURTZ
To Be Assistant Secretary for Public and Indian Housing, Department of 
                     Housing and Urban Development
                            October 26, 2017
    Thank you, Chairman Crapo, Ranking Member Brown, and Members of the 
Committee. I am humbled and honored to appear before you today as you 
consider my nomination to serve as the Assistant Secretary for Public 
and Indian Housing at the U.S. Department of Housing and Urban 
Development. I want to extend my sincere thanks and gratitude to 
Secretary Carson for recommending me for this position and President 
Trump for nominating me.
    Joining me today are my wife Abby, my two boys Liam and Henry, my 
parents, Bob and Candy, as well as my brother Chase, my sister-in-law 
Autumn and their son Harvey. Additionally, I want to thank my friends 
from HUD who are here today and watching this hearing, both career and 
political employees.
    Having served at the Department as a political appointee in the 
Bush administration, a career civil servant during the Obama 
administration, and now again as an appointee in the Trump 
administration, I believe I bring a unique background and diverse 
perspective to the position for which I am nominated today. 
Additionally, I worked for the City of Detroit, where I interacted with 
many of HUD's programs. I am a ``houser'' at heart, a practitioner of 
HUD programs and a true believer in the mission of the Department. I 
have seen firsthand what we can do with HUD's programs, but I have also 
had the opportunity to help craft rules and regulations that I have 
then had to implement at the local level. And I can affirm that what I 
thought was a good idea in my chair in Washington, made a lot less 
sense when sitting in my seat in Detroit.
    My time with the City of Detroit, in many ways, was inspirational. 
I was blessed to work with an incredible team to help turn around a 
housing department considered among the worst performing in the Nation. 
In conjunction with the Mayor's office, private sector developers, and 
the City's Housing Commission, we developed and produced safe and 
affordable housing for the City and its residents. While the 
renaissance that is now taking place in the City of Detroit is 
something of which I am extremely proud, the real reward for me is 
seeing the joy on the faces of individuals that we were able to help. 
They will always be a reminder of what we do in public housing and 
public service on a day to day basis: we help people.
    One of the fundamental lessons I learned in working with the City 
was not only the impact of the policies we create at HUD and in 
Washington, but that a one-size-fits-all approach to creating more 
sustainable, affordable housing does not work. The issues Detroit faces 
are different than those faced by Seattle, Boise, and Tribal Lands. We 
should give serious thought to allowing Public Housing Authorities more 
control of how they manage their portfolios and how to find unique ways 
to address their own housing needs. The people who know best are the 
local officials managing the local PHAs, and we should provide them 
with the tools they need to address their own unique issues. If 
confirmed this will be a major goal of mine, and I look forward to 
working with you to make it a reality.
    The Nation is facing an affordable housing crisis and we cannot 
just build our way out of it. Today, only a quarter of those who are 
eligible for housing assistance actually receive it. We must find ways 
to graduate residents from public housing and put them on a path to 
achieving greater economic mobility and self-sufficiency, which allows 
us to serve others who need our assistance. This is a priority of 
Secretary Carson--one in which I wholly and enthusiastically support. 
If confirmed, I look forward to building on the successes of our 
current programs while working with the Secretary to implement new and 
innovate ways to achieve HUD's mission.
    While I have spent some time discussing public housing programs, I 
would also like to let the Committee know that, if confirmed, I would 
also focus on the Native American programs that are such an integral 
part of the work that is done in HUD's Office of Public and Indian 
Housing. I had the opportunity to travel to Indian country with 
Secretary Carson earlier this year in my current capacity, and 
appreciate and understand the needs of our tribal partners. Please know 
that I am committed to working with our tribal partners to ensure safe, 
decent and affordable housing for these communities.
    If confirmed, I look forward to working with the Members of this 
Committee to help improve the lives of those Americans who rely on the 
programs managed by the Office of Public and Indian Housing.
    Thank you again for your consideration of my nomination. I look 
forward to your questions.



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               PREPARED STATEMENT OF SUZANNE ISRAEL TUFTS
To Be Assistant Secretary for Administration, Department of Housing and 
                           Urban Development
                            October 26, 2017
    Chairman Crapo, Ranking Member Brown, and distinguished Members of 
the Committee, it is a great privilege to appear before you this 
morning. I am deeply honored that President Trump has nominated me to 
serve under Secretary Carson as the Assistant Secretary for 
Administration at the Department of Housing and Urban Development.
    I would like to introduce my husband of 35 years, Bob Tufts, and 
our daughter, Abigail. I also would like to thank my extended family, 
friends and former colleagues for their love and support. One does not 
receive opportunities like this without years of help from many people, 
and that is certainly the case for me.
    There are two people who could not be here today, but without whose 
courage and life experience I would not be the person I am, nor have 
the passion for public service that I do--my late parents, Abraham and 
Henriette Israel. Born in Europe, they were living in Antwerp when, on 
the morning of May 10, 1940, they awoke to an invasion of enemy planes 
overhead forcing them to flee.
    For the next 10 years, until they came to the United States, they 
were homeless and lived wherever they could find a roof over their 
heads; even, one night, sleeping under the pews of a church in France.
    As the only child of Holocaust survivors, making a difference and 
working in mission-based endeavors has been a guiding force in my life. 
However, I have long believed that passion will not produce results 
without strong administrative and human resources support. I bring to 
bear three categories of skills and experience that I believe will help 
HUD improve its operations and services:

  1.  Experience in turnaround management and leadership development 
        within mission-based organizations;

  2.  Experience in the field which makes me sensitive to HUD's 
        ultimate customers; and,

  3.  Experience as an outside-the-box, creative thinker, with strong 
        analytical skills and the ability to both plan and implement 
        with energy and enthusiasm.

    I gained these skills and experiences across many silos, including 
practicing law and spending over 20 years in management and consulting. 
I served as Regional Director, Region II of ACTION (the current 
Corporation for National Service) where I worked with HUD on a variety 
of tenant empowerment, literacy, health care and microenterprise 
programs and led the Region in improving its service delivery.
    I have also served as the President and CEO of the American Women's 
Economic Development Corporation where I led the turnaround of this 
beloved but beleaguered organization. Our team succeeded in eliminating 
the organization's 10-year-old debt while improving its services 
including curriculum and online training. We spearheaded a nationally 
recognized entrepreneurship training program for women living in the 
New York City Housing Authority in which 65 percent of program 
participants achieved financial independence and business success.
    But I believe AWED's most significant service was rendered after 
the 9/11 attacks. Within 72 hours of the attacks AWED provided 
emergency personal and business relief services for our students, 
faculty and alumni located around Ground Zero, as well as throughout 
the City; efforts that earned the organization bipartisan recognition.
    My parents were able to make a wonderful life in this country; a 
life that started with a stable, affordable home in a safe, secure 
neighborhood. I can think of little that would be more meaningful than 
to help others find the same path to a better life for themselves and 
their families that my parents did. If confirmed, I will work hard to 
ensure that HUD's administrative and human resources services are best 
directed to fulfill its important mission.
    Mr. Chairman, distinguished Members of this Committee, thank you 
again for your consideration of my nomination. I welcome your 
questions.



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        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                    FROM BRIAN D. MONTGOMERY

Q.1. Mr. Montgomery and Mr. Kurtz, the rental assistance 
programs you administer affect many families, seniors, and 
individuals with disabilities.
    If confirmed, will you commit to meeting with assisted 
families and organizations that advocate on behalf of HUD 
program participants and low-income families?

A.1. Yes, while serving as FHA Commissioner, my staff and I 
consistently met with resident advocacy organizations such as 
the National Alliance of HUD Tenants, ADAPT, the National Low-
Income Housing Coalition, LeadingAge, National Housing Trust, 
National Leased Housing Association, and others to discuss ways 
to better address the needs of residents living in apartments 
subsidized with Section 8 Project Based Rental Assistance, 
Section 202 Supportive Housing for the Elderly, and Section 811 
Supportive Housing for Persons with Disabilities, as well as 
affordable housing financed with FHA-insured mortgages. I will 
continue to do so if confirmed.

Q.2. Do you support dialogue between HUD staff and organized 
tenant groups to assist HUD in its oversight of housing 
programs?

A.2. Yes, this sort of dialogue is essential in helping HUD 
administer its programs. Communication between HUD staff, 
leadership, and tenant advocacy groups is key to maximizing 
program delivery and efficiency. I always found that dialogue 
between the Office of Multifamily Programs Asset Management and 
Portfolio Oversight staff and tenant organizations reaped great 
insight into issues needing attention and often led the way to 
resolution.

Q.3. Mr. Montgomery, from your prospective, who are FHA's 
customers? Who is FHA designed to serve?

A.3. FHA's customers are extremely low-, very low-, low- and 
moderate-income renters (including seniors and people with 
disabilities), low- to moderate-income first-time homebuyers 
and homeowners (or those seeking to refinance), FHA-approved 
single- and multifamily lenders and servicers, private 
apartment owners, and others utilizing FHA subsidies and/or 
financing to meet our Nation's housing needs.

Q.4. Mr. Montgomery, if you plan to recuse yourself from 
matters involving Collingwood's clients not just the clients 
you worked for or the companies for which you served on the 
board, will you be able to perform the duties of FHA 
Commissioner?

A.4. My ethics agreement with HUD and the Office of Government 
Ethics spells out the limited circumstances under which I would 
be required to recuse myself. It will not interfere with my 
ability to perform the duties of FHA Commissioner.

Q.5. How would you delegate your responsibilities if you were 
unable to consider a specific matter?

A.5. In the event I need to recuse myself from a matter, I 
would delegate my authority to the General Deputy Assistant 
Secretary in the Office of Housing, Ms. Dana Wade.

Q.6. In recent years, many cities have seen a wave of 
population growth and investment that have led to greater 
economic activity, tighter rental housing markets, and rising 
rental housing costs. As a result, many lower-income families 
and businesses who endured challenging decades in their 
communities are finding themselves priced out of their long-
time neighborhoods just when additional economic opportunities 
are opening up. Loss of housing in urban neighborhoods can push 
residents away from access to jobs, transit, and local support 
networks such as hospitals and child care. In many of these 
neighborhoods, federally assisted housing may be coming to the 
end of long-term affordability contracts or at risk of loss due 
to physical deterioration. HUD estimates that we are losing 
10,000 units of public housing every year due to physical 
obsolescence. By 2025, nearly 2.2 million units of HUD-assisted 
and Low Income Housing Tax Credit-supported housing will reach 
the end of their affordability periods. \1\
---------------------------------------------------------------------------
     \1\ See ``America's Rental Housing: Expanding Options for Diverse 
and Growing Demand, Key Facts'', p. 4, Harvard Joint Center for Housing 
Studies, December 9, 2015, available at http://jchs.harvard.edu/
americas-rental-housing.
---------------------------------------------------------------------------
    Do you believe that HUD should help preserve housing and 
economic opportunities for lower-income families in 
neighborhoods experiencing economic growth and rising rental 
costs?

A.6. HUD, as part of its mission, should strive to preserve 
housing opportunity for individuals and families with limited 
incomes. The objective of HUD's Office of Recapitalization and 
Assisted Housing Oversight Division is to preserve quality 
affordable housing through refinancing and/or rehabilitating 
existing affordable housing, and renewing expiring rental 
assistance contracts. While serving as FHA Commissioner, I made 
significant changes to FHA protocols to actively increase 
preservation efforts by better leveraging FHA resources through 
increased utilization of low-income housing tax credits 
(LIHTCs) and private activity bond financing.

Q.7. If so, what role do you think the programs of the Office 
of Housing should play in preserving these opportunities?

A.7. The Office of Housing's role in preserving its portfolio 
of 22,000 privately owned multifamily properties and more than 
1.4 million assisted rental units is central to HUD's overall 
efforts to preserve the affordable housing stock. Working with 
private apartment owners and nonprofit organizations, 
especially in high-cost areas, to promote the renewal of 
expiring Section 8 Project Based Rental Assistance contracts 
and facilitating the refinancing of FHA-insured and uninsured 
multifamily properties continue to be the most impactful 
methods for the Office of Housing to support preservation.

Q.8. Very-low income people with disabilities have great 
difficulty in finding and paying for suitable affordable 
housing with access to appropriate features and services. Over 
1 million very low-income, non-elderly persons with 
disabilities pay over half of their incomes for housing, and 
approximately 2 million more people--including those with 
developmental disabilities--are living in more restrictive, 
institutional environments than they would choose or are living 
with an aging caregiver. Rent on a modest 1 bedroom apartment 
at HUD's estimated national fair market rent would consume all 
of the income of a person relying upon Supplemental Security 
Income (SSI).
    What do you view as the Office of Housing's role in meeting 
the housing needs of low-income individuals with disabilities?

A.8. I strongly support the Section 811 program. Section 811 
plays a key role providing expanded housing choice for 
extremely low-, very low, and low-income renters with 
disabilities who cannot find affordable housing. While serving 
as FHA Commissioner, I spearheaded program changes to leverage 
Section 811 rental assistance funds in housing tax credit and 
bond financed transactions to expand the supply of affordable 
housing for people with disabilities. This concept materialized 
and, currently under this program, State housing finance 
agencies that have entered into partnerships with State health 
and human services and Medicaid agencies can apply for Section 
811 Project Rental Assistance for new or existing affordable 
housing developments funded by LIHTC, HOME, or other sources of 
funds. It provides stable housing for nearly 30,000 households, 
improving their quality of life while also reducing health care 
costs. If confirmed, you have my assurance that I will continue 
to advocate for this important program.

Q.9. Across America, seniors are struggling to pay for their 
housing costs. We know that very low income seniors who pay 
more than half of their incomes for housing also spend much 
less than their peers on health care, food, transportation and 
retirement savings. We also know that affordable housing can be 
a tremendous, cost-saving platform for the provision of 
services to seniors--services that help seniors remain healthy, 
address health challenges, and age in place.
    Yet, only one-third of seniors eligible for HUD rental 
assistance programs get to use them, resulting in the housing 
cost burdens and associated lower spending on health, food, and 
transportation. These shut-out seniors also miss out on the 
health benefits that come with access to a service coordinator 
in their apartment buildings, from living in appropriately 
accessible homes that HUD-assisted housing provides, and living 
in a community that guards against social isolation.
    What is more, as you know, recent studies from both the 
Bipartisan Policy Center and Harvard's Joint Center for Housing 
Studies have documented a coming wave of housing needs for 
America's senior citizens. These needs will include: additional 
affordable rental housing, housing and community adaptations 
necessary to help seniors age in place; integrating health and 
supportive services into housing; and improving technologies 
such as telemedicine. To meet these challenges, the Bipartisan 
Policy Center has recommended a combination of continued 
investment in affordable rental housing, home modification 
programs, and coordination between health care and housing 
providers to improve health outcomes and lower costs.
    If confirmed, what will you do to meet the housing 
challenges of an aging America?

A.9. I'm a strong supporter of HUD's work to provide stable 
housing for vulnerable seniors and to help them remain safely 
in their homes as they age. Affordable and stable housing with 
supportive services allows seniors to live independently, but 
with a higher level of overall security.
    Understanding the need for supportive housing for this 
vulnerable population, I will continue to support the 
traditional Service Coordinator program. This program provides 
for the employment of Service Coordinators in insured and 
assisted Multifamily Housing developments that are designed for 
seniors and persons with disabilities. Of the 12,000 
Multifamily assisted properties, more than 4,000 have service 
coordinators that are either project-based or grant funded.
    I also support the Administration's request to expand the 
Rental Assistance Demonstration to enable the conversion of 
Section 202 Project Rental Assistance Contract to long-term 
Section 8 Project Based Rental Assistance contracts. This will 
provide much-needed recapitalization opportunities to preserve 
existing affordable senior housing.
    And finally, I have always been a supporter of the Home 
Equity Conversion Mortgage (HECM) program, which allows seniors 
to age in place by tapping the equity in the home. This is an 
important option for seniors that we need to ensure remains 
financially viable.

Q.10. Will you take actions to increase the supply of 
affordable, accessible rental housing for lower-income seniors?

A.10. Yes, through the increased promotion of FHA's multifamily 
mortgage products as credit enhancement on new construction 
transactions utilizing housing tax credit and/or bond financing 
on senior developments. Most State housing finance agencies 
have senior set asides and/or additional points for the new 
construction of accessible senior housing with services. FHA 
multifamily mortgage insurance products, service coordinator 
funding, and rental assistance programs all work well in 
facilitating new construction development.

Q.11. Will you take actions to help seniors modify their homes 
in order to help them age in place?

A.11. Yes, having a good understanding of the cost associated 
with housing one senior in a Section 202 property for 1 year, 
the cost efficiency realized through aging in place options is 
clear.

Q.12. How would you foster collaboration with health care 
providers to meet the needs of America's seniors?

A.12. FHA's health care programs (under Section 232 and 242 of 
the National Housing Act) are administered by the Office of 
Healthcare Programs. FHA staff collaborate regularly with 
health care providers, independent living, nursing home and 
assisted living facility owners to discover ways to further 
meet the housing and health care needs of America's seniors.
    Section 232 mortgage insurance covers assisted living 
facilities, skilled nursing facilities, and board and care 
homes that provide essential residential care services to 
senior citizens. The Section 242 program provides mortgage 
insurance to acute-care hospitals that provide critical health 
care services to communities nationwide. These important 
programs work in partnership with lenders and health care 
providers across America to ensure that essential services, 
affordability, and access to health care are maintained for 
seniors, and also collaborate with other Federal and State 
agencies to maximize safety and ensure quality of care.
    Additionally, the Section 202 program applicants for 
funding often have existing long-term partnerships with State 
health and human services and Medicaid agencies to provide a 
more comprehensive approach to addressing the housing, 
supportive services and health care needs for seniors.
    If confirmed, I would continue to support, manage, and 
develop the FHA health care portfolio and promote the use of 
other existing mortgage insurance programs to expand affordable 
senior housing opportunities, affordable health care (facility) 
financing, and comprehensive supportive services.

Q.13. Do you support service coordination as a strategy for 
improving outcomes for seniors?

A.13. Yes, to reiterate, FHA has several options for financing 
senior housing development or rehabilitation, but addressing 
supportive service needs, as identified by State and local 
agencies, provides a far more comprehensive approach for 
success and subsequently a better outcome for seniors.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SHELBY
                    FROM BRIAN D. MONTGOMERY

Q.1. Mr. Montgomery, I have long been a supporter of a cost 
benefit analysis on all regulations because I believe that the 
Government must ensure that the cost of implementing a 
regulation does not outweigh its intended benefits. Can you 
commit to ensuring that a cost-benefit analysis will be 
conducted on regulations that are considered under the FHA?

A.1. I very much share your view that new regulations need to 
undergo a vigorous cost-benefit analysis. The President has 
made this a priority as well and I want to assure you that, if 
I'm confirmed, we will conduct a cost-benefit analysis on new 
regulations.

Q.2. Mr. Montgomery, will you ensure that the intended impact 
of FHA rules are consistent with the spirit and purpose of 
their underlying statute, and that they do not intrude into 
appropriate State regulation or law?

A.2. Yes, I think that is very important. We want to make sure 
FHA is complying with the law as well as congressional intent, 
and we need to have a healthy respect for its impact on States.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                    FROM BRIAN D. MONTGOMERY

Q.1. There's no doubt that the FHA's mission of promoting home 
ownership is an important one. That said, I am mindful that 
it's taxpayers who were forced to bailout the FHA with $1.7 
billion when it dipped in the red during 2013.
    On the other hand, private mortgage insurers cover roughly 
36 percent of the market, which is behind the FHA's share, and 
don't need taxpayers to cover their losses.
    Fannie and Freddie are currently offloading their risk to 
reinsurance markets and mortgage insurers. If expanded, these 
initiatives will prevent future taxpayer bailouts.
    Please answer the following with specificity:
    Would you implement a similar program at FHA?

A.1. I would certainly be open to exploring greater risk 
sharing within the FHA program. However, it's important to keep 
in mind that many borrowers served by FHA would not be served, 
or would be served at much higher cost, by private capital. FHA 
would have to carefully assess if private sector pricing for 
FHA credit risk would truly strengthen the financial condition 
of the Mutual Mortgage Insurance Fund--and whether or not FHA's 
outdated technology can effectively operate such a program.

Q.2. Can you do it alone or must Congress act?

A.2. My understanding is FHA has certain statutory authority 
for off-loading risk. These authorities would need further 
legal review to understand exactly what kind of program and 
what size could be entertained without additional authorities. 
Furthermore, because the GSEs and FHA operate different 
business models, any risk sharing initiative must be carefully 
reviewed to make sure it works for FHA.

Q.3. Do you favor a more precise statutory definition of FHA's 
mission?

A.3. As Congress considers the future of the housing finance 
system in the context of reform, consideration of the proper 
role and mission of FHA within the system is necessary, 
including the vital role FHA plays with State and local Housing 
Finance Authorities. The mission of FHA should be aligned to 
the role Congress wishes it to play going forward.

Q.4. Manufactured housing is an affordable housing option for 
more than 22 million working families.
    It's particularly important in my State, where 20.3 percent 
of all homes are prefabricated.
    Please answer the following with specificity:
    What's your view on HUD's regulations governing 
manufactured housing?
    Does the current framework ensure affordability and access?

A.4. Manufactured housing is an incredibly important source of 
housing for millions of Americans and the only form of non-
subsidized housing HUD directly regulates. The President's 
Executive Order #13777 charged all Federal agencies with re-
examining their rules and reducing the regulatory burden on the 
American public. We need to make sure FHA's manufactured 
housing rules undergo a rigorous cost-benefit analysis to 
ensure we are balancing important product safety considerations 
with affordability and access. If confirmed, you have my 
commitment this will be a priority.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR PERDUE
                    FROM BRIAN D. MONTGOMERY

Q.1. During your previous tenure as FHA commissioner, you 
chaired the Mortgagee Review Board. Can you describe the 
administrative actions you took against FHA lenders that failed 
to comply with program requirements?

A.1. During my prior tenure as FHA commissioner, during which I 
chaired the Mortgagee Review Board, we took aggressive action 
against FHA lenders that committed fraud or otherwise failed to 
comply with important program requirements. As I stated during 
my confirmation hearing, there is simply no place for fraud 
within FHA. After all, we are talking about the single biggest 
investment most Americans will make during their lives, and 
there are important taxpayer protections to consider as well.
    In total, we brought cases against 38 lenders in 2005 (some 
of which were prior to my confirmation), 21 in 2006, 18 in 
2007, 95 in 2008, and 593 in 2009. (It's important to note that 
the spike during those last 2 years was a direct result of a 
determination by HUD's Administrative Law Judge that lenders 
who do not comply with annual recertification requirements must 
have a decision rendered by the MRB, rather than by a decision 
of the Lender Activities Office Director via a delegation of 
authority from the Board.)
    Of note, in 2006, we settled an estimated $41 million case 
with AMRO for possible violations of the False Claims Act, 
Program Fraud Civil Remedies Act, and HUD mortgage lending 
requirements. The Government found that during the period 
January 2000 to April 2003, two of AMRO's underwriters 
authorized AMRO's employees to sign the underwriters' names to 
the Addendum to the Uniform Residential Loan Application. The 
application contains language that certifies the underwriters 
reviewed and underwrote loans that the underwriters did not 
personally review or underwrite. On December 30, 2005, HUD 
executed a settlement agreement with AMRO where the lender 
agreed to pay the U.S. Government $16.85 million for making 
false certifications to HUD on 28,097 FHA-insured loans. AMRO 
also agreed to not submit insurance claims on 783 defaulted 
loans, for an additional estimated savings to the Government of 
$24.35 million.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY
                    FROM BRIAN D. MONTGOMERY

Q.1. Mr. Montgomery, in January 2015, HUD reduced premiums and 
caused FHA to absorb many borrowers that could have been 
otherwise served by the private sector, increasing the market 
share for Government-backed lending.
    Is it your belief that the FHA should be implementing 
arbitrary premium reductions to gain market share and increase 
American taxpayers' exposure to mortgage credit risk?

A.1. FHA premiums should never be set arbitrarily. During my 
prior tenure as FHA Commissioner, we worked closely with OMB to 
set mortgage insurance premiums in an actuarily sound manner--
at levels that carefully balanced FHA's dual responsibility of 
promoting home ownership for first-time and low-and moderate-
income borrowers while also protecting the Mutual Insurance 
Fund and ultimately the taxpayers who stand behind it. If I am 
confirmed to lead FHA again, I certainly would want to take a 
fresh look at mortgage insurance premiums. I know FHA will be 
releasing its annual actuarial report later this month and I 
think that will help inform any future decision on premiums.

Q.2. Mr. Montgomery, analysis \1\ from the American Enterprise 
Institute (AEI) shows that almost half of the buyers that 
benefited from FHA's January 2015 premium reduction were 
poached from other markets, such as the GSEs, which have some 
amounts of private capital standing in a first loss position. 
Another third of the 180,000 buyers would have entered the 
markets regardless of the lower premiums because of an 
improving economy. Numerous high-level HUD officials from 
previous Administrations, including former FHA Commissioner 
Carol Galante, have supported the notion that private capital 
should play a leading role in insuring low downpayment loans.
---------------------------------------------------------------------------
     \1\ American Enterprise Institute (AEI) International Center on 
Housing Risk, ``The 2015 Cut in FHA's Mortgage Insurance Premium: Did 
It Work as Intended?'' December 27, 2016. Available at: https://
www.housingrisk.org/wp-content/uploads/2017/09/FHA-Premium-Cut-
Briefing-FINAL.pdf.
---------------------------------------------------------------------------
    What is your vision for how FHA can complement, but not 
crowd out private capital in the mortgage insurance market?

A.2. Private capital should always play the leading role in a 
vibrant housing finance system and we are continuing to see 
private capital return, albeit slowly. While there will 
naturally be some overlap between the types of borrowers served 
by FHA and those served largely through private capital, I've 
never viewed them as being in direct competition. The key, as I 
noted in my above answer, is to set premiums and other policies 
in a way that allows FHA fulfill its mission while minimizing 
any encroachment into segments of the market that are best 
served by private capital.
    Mr. Montgomery, the fiscal year 2016 annual report for the 
Mutual Mortgage Insurance Fund (MMIF) was the first actuarial 
report in nearly a decade to show that the FHA's single-family 
program complied with the 2 percent statutory minimum capital 
requirement. Despite being below the statutory minimum for 
close to a decade and receiving a $1.7 billion taxpayer bailout 
in 2013, FHA suffered no consequences and, in fact, continued 
to expand its footprint in the housing market.

Q.3. Do you think that, as it would be for any other financial 
institution, that there should be ramifications for when FHA 
fails to meet this minimum capital requirement?

A.3. It is vitally important that FHA maintain its capital 
ratio above the congressionally mandated level of 2 percent and 
that failure to meet that level be subject to strong 
congressional oversight. Further ramifications should be 
considered carefully, especially if they limit FHA's ability to 
provide liquidity and maintain the Nation's housing market 
during times of significant economic stress.

Q.4. Do you agree that it is time to make FHA more financially 
resilient by increasing its capital requirements to be more in 
line with its private market counterparts?

A.4. Congress may well wish to consider higher capital 
requirements for FHA as it explores broader housing finance 
reform. I urge that any such consideration carefully balance 
the ability of FHA to fulfill its mission to provide affordable 
mortgage finance with protecting taxpayers. A countercyclical 
framework that builds capital in good times to cushion the fund 
in times of stress also merits consideration.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR MENENDEZ FROM BRIAN D. MONTGOMERY

Q.1. In January, you said ``[e]xcessive enforcement actions, 
coupled with State and Federal regulatory reforms, have 
discouraged mortgage lenders from making any loans that fall 
outside of the strict boundaries set by CFPB regulations.'' 
Please explain what you meant.

A.1. There's no doubt in my mind that new rules were necessary 
to prevent the type of lending that led to the financial 
crisis. I just wonder if maybe we haven't gone too far in the 
opposite direction. The Urban Institute calculated that 5.2 
million more loans would have been made between 2009 and 2014 
if we were using the reasonable underwriting standards in place 
back in 2001. In her paper, Laurie Goodman wrote ``The factors 
contributing to the tight credit box are complex, ranging from 
the issue of lender overlays due to repurchase risk, to the 
high costs of servicing delinquent loans, to fears of 
litigation by the Department of Justice, the HUD Inspector 
General, or State Attorneys General.'' That's all I meant by 
the quote you referenced.

Q.2. In your opinion, what role should the Federal Housing 
Administration play in identifying and investigating cases in 
which lenders submit false claims for FHA mortgage insurance?

A.2. When I chaired the Mortgagee Review Board as FHA 
Commissioner, we took aggressive action against FHA lenders 
that committed fraud or otherwise failed to comply with 
important program requirements. As I stated during my 
confirmation hearing, there is simply no place for fraud within 
FHA. After all, we are talking about the single biggest 
investment most Americans will make in their lives, and there 
are important taxpayer protections to consider as well.
    In total, we brought cases against 38 lenders in 2005 (some 
of which were prior to my confirmation), 21 in 2006, 18 in 
2007, 95 in 2008, and 593 in 2009. (It's important to note that 
the spike during those last 2 years was a direct result of a 
determination by HUD's Administrative Law Judge that lenders 
who do not comply with annual recertification requirements must 
have a decision rendered by the MRB, rather than by a decision 
of the Lender Activities Office Director via a delegation of 
authority from the Board.)
    Of note, in 2006, the FHA settled an estimated $41 million 
case with AMRO for possible violations of the False Claims Act, 
Program Fraud Civil Remedies Act, and HUD mortgage lending 
requirements. The Government found that during the period 
January 2000 to April 2003, two of AMRO's underwriters 
authorized AMRO's employees to sign the underwriters' names to 
the Addendum to the Uniform Residential Loan Application. The 
application contains language that certifies the underwriters 
reviewed and underwrote loans that the underwriters did not 
personally review or underwrite. On December 30, 2005, HUD 
executed a settlement agreement with AMRO where the lender 
agreed to pay the U.S. Government $16.85 million for making 
false certifications to HUD on 28,097 FHA-insured loans. AMRO 
also agreed to not submit insurance claims on 783 defaulted 
loans, for an additional estimated savings to the Government of 
$24.35 million.
    From the January 2006 HUD News Release: Brian Montgomery, 
HUD's Assistant Secretary for Housing-Federal Housing 
Commissioner said, ``As much as we intend to aggressively 
expand the FHA program to help even more families realize their 
American Dream and become homeowners, we will not do so at the 
expense of the financial soundness, integrity or reputation of 
the Federal Housing Administration. This settlement is evidence 
that we will take immediate action if our participating 
lenders, however large or small, fail to follow our 
underwriting requirements.''

Q.3. During your nomination hearing, in response to a question 
from Senator Corker, you said ``I am not saying you should look 
the other way when there is fraud or misrepresentation, but I 
hope we have a serious discussion about whether or not the 
False Claims Act is the right tool going forward.'' Please 
explain what you meant by this comment.

A.3. What I was referring to in my response to Senator Corker 
was the important work currently underway at FHA to finalize 
what is known as Defect Taxonomy. This is an area I want to 
focus on if confirmed because I believe if FHA is able to 
provide FHA-approved lenders with clearer ``rules of the road'' 
for what constitutes a material violation of program 
requirements, they will hopefully be able to originate better, 
safer mortgages. I'd like to see us focus more on protecting 
borrowers on the front end instead of waiting until they are 
harmed and turning to the False Claims Act to extract 
penalties.

Q.4. If confirmed as FHA Commissioner, please outline any steps 
you would take with regard to the HUD's role in enforcement 
actions under the False Claims Act.

A.4. My understanding is that HUD and Justice Department staff 
have already been discussing the use of the False Claims Act 
going forward and whether a 150-year-old statute is the proper 
enforcement tool. An FHA representative should be an active 
participant in these discussions.

Q.5. During your nomination hearing, in response to a question 
from Senator Corker, you raised the question of whether FHA 
insurance should be restricted to first-time homebuyers. Of the 
number of FHA endorsements in fiscal year 2016, 30 percent were 
refinances that helped borrowers reduce their housing costs and 
approximately 18 percent of purchase loans were for non-first-
time homebuyers. Do you support restricting FHA endorsements to 
first-time homebuyers?

A.5. I do not. In fact, I think restricting FHA lending to 
first-time homebuyers would greatly limit FHA's ability to help 
lower-income borrowers purchase or refinance a home. In my 
response to Senator Corker, I was simply listing some of the 
recommendations that were recently put forward in a CBO study 
that offered options for managing FHA's risk. I was by no means 
endorsing this particular policy.

Q.6. If confirmed, do you plan to revisit the current 
Administration's decision to reverse the annual mortgage 
insurance premium reduction announced by the previous 
Administration?

A.6. If confirmed, I certainly would want to take a fresh look 
at mortgage insurance premiums but speaking from experience it 
is a lengthy process that also involves OMB. I know FHA will be 
releasing its annual actuarial report later this month and I 
think that will help inform any future decision on premiums.

Q.7. As a result of the Office of Multifamily Housing's 
Multifamily for Tomorrow Transformation, nearly all of the 
multifamily asset management positions located in Newark, New 
Jersey have been relocated to New York. As a result, I have 
heard repeated complaints by owners in New Jersey since the 
consolidation began. Will you commit to retaining a sufficient 
number of multifamily asset managers in the HUD Newark office 
to properly serve the owners and residents of federally 
assisted housing in my home State of New Jersey?

A.7. I'm certainly sensitive to your concerns given the sheer 
volume of multifamily housing in the State of New Jersey. I 
have heard differing reports from the field--both that the 
Multifamily Transformation has achieved positive results, but 
also that it's been disruptive in some parts of the country. If 
confirmed, I'd like to take a closer look at how we can be 
better meeting New Jersey's needs.

Q.8. Do you support initiatives that pair housing counseling 
with a mortgage insurance premium incentives, including but not 
limited to the Federal Housing Administration's Homeowners 
Armed with Knowledge Program?

A.8. See below.

Q.9. If confirmed as FHA Commissioner, what ideas or 
initiatives would you pursue to expand access to housing 
counseling?

A.9. I think housing counseling is absolutely critical. During 
my prior tenure as FHA Commissioner, I sat through a counseling 
session and was able to see the value first hand. I also served 
on the board of NeighborWorks America during my entire tenure. 
If confirmed, I'd like to take a fresh look at ways we can 
incentivize housing counseling as a tool to provide homeowners 
and potential borrowers with information to (1) make 
independent financial decisions and (2) maximize the level of 
success of FHA borrowers.

Q.10. In New Jersey, 70 percent of extremely low-income senior 
households pay more than half of their income for housing. 
Nationally, only one in every three seniors eligible for HUD 
rental assistance programs get to use them, resulting in severe 
housing cost burdens and associated with limited spending 
ability on other necessities. With baby boomers retiring, the 
number of senior renters is projected to soar between now and 
2035, as will the number of cost-burdened seniors.
    What specific policy steps do you plan to take to expand 
opportunities that provide affordable, sustainable, and 
dignified housing that will allow our Nation's low-income 
elderly to maintain independence and age in place?

A.10. I'm a strong supporter of HUD's work to provide stable 
housing for vulnerable seniors and to help them to remain 
safely in their homes as they age. Stable housing provides 
financial security, physical security, social connections, and 
enables delivery of long-term community based supportive 
services. I also recognize that to support vulnerable 
residents, housing providers must possess the skills and 
resources to enable residents to remain safely in their home, 
regardless of cognitive impairment, limited mobility, or loss 
of functionality.
    Understanding the need for supportive housing for this 
vulnerable population, I will continue to support the 
traditional Service Coordinator program. This program provides 
for the employment of Service Coordinators in insured and 
assisted Multifamily Housing developments that are designed for 
the elderly and persons with disabilities. Of the 12,000 
Multifamily assisted properties, a little over 4,000 have a 
service coordinator that is either project-based or grant-
funded.
    I also support the Administration's request to expand the 
Rental Assistance Demonstration to enable conversation of 
Section 202 Project Rental Assistance Contract to long-term 
Section 8 assistance. This will provide much-needed 
recapitalization opportunities to preserve existing affordable 
senior housing.
    And finally, I have always been a supporter of the Home 
Equity Conversion Mortgage (HECM) program, which allows seniors 
to age in place by tapping the equity in the home. This is an 
important option for seniors so we need to ensure it remains 
financially viable.

Q.11. Will you commit to fighting attempts by the 
Administration to make cuts to the Section 202 program?

A.11. I am a strong supporter of HUD's role in providing stable 
housing to seniors. The Section 202 program is a central part 
of these efforts, having created nearly 400,000 homes for low-
income seniors. Section 202 Project Rental Assistance Contracts 
also provide essential service coordination resources to help 
seniors remain in their homes as they age. If confirmed, you 
have my assurance that I will continue to advocate for this 
important program.

Q.12. In 2010, Congress passed the Frank Melville Supportive 
Housing Investment Act to reform and modernize the HUD Section 
811 program, bipartisan legislation I was proud to author. The 
Section 811 Project-Based Rental Assistance program has been 
enormously successfully in helping States agencies develop 
integrated permanent supportive housing targeted to people with 
disabilities who would otherwise be living in high-cost 
institutional settings or worse, be homeless. Prior to passage 
of the bill, the per-unit cost of the program was $150,000. By 
contrast, the per-unit cost of the program now averages 
$30,000.
    What will you do to build on this record of success for the 
Section 811 project-based rental assistance program?

A.12. I very much appreciate your commitment to this program as 
well as the legislation you authored. The Section 811 Project 
Rental Assistance Demonstration is a promising new initiative 
to deliver integrated housing opportunities for people with 
disabilities. The lessons learned and the partnerships formed 
between State housing agencies, State health and human services 
agencies, and State Medicaid agencies, will pave the way for 
future efforts to provide integrated housing solutions, 
improving quality of life for residents at reduced cost to 
taxpayers. I'm looking forward to seeing the results of the 
``PRA Demo'' so that we can develop further proposals to 
support integrated supportive housing and to foster effective 
State-level partnerships.

Q.13. How do you plan to support the develop of permanent 
supportive housing units so that adults with disabilities can 
live amongst the community as opposed to in costly and isolated 
institutional settings?

A.13. See above.

Q.14. What strategies do you plan to undertake to address the 
challenge of assisting States to meet this enormous demand for 
affordable rental housing for non-elderly people with 
disabilities?

A.14. See above.

Q.15. Will you commit to fighting attempts by the 
Administration to make cuts to the Section 811 program?

A.15. I strongly support the Section 811 program. Section 811 
plays a key role assisting low-income renters with disabilities 
who cannot find affordable housing. Section 811 provides stable 
housing for nearly 30,000 households, improving their quality 
of life while also reducing health care costs. If confirmed, 
you have my assurance that I will continue to advocate for this 
important program.

Q.16. The President's budget request includes a general 
provision increasing tenant rent contributions from 30 percent 
to 35 percent of income. According to the Department's own 
estimates, for households living in units receiving subsidies 
through the section 8 project-based rental assistance program, 
this proposal would result in a nearly 22 percent tenant rent 
increase in the first year, and a 31 percent rent increase in 
subsequent years. In addition, the Department calculated that a 
staggering 64 percent of the population impacted by the 
proposed rent increases are elderly or disabled.
    Do you believe that tenant rent increases of 22 percent and 
31 percent are significant?

A.16. See below.

Q.17. In your opinion, how will the impacted elderly and 
disabled households--the vast majority of whom live on fixed 
incomes--be able to afford a 22 percent and ultimately 31 
percent rent increase?

A.17. See below.

Q.18. Do you believe that a 22 percent rent increase, and 
ultimately a 31 percent rent increase, on the Nation's lowest-
income families, elderly, and persons with disabilities will 
increase housing instability? If not, please explain.

A.18. The proposed increases in tenant contributions, averaging 
less than $90 per month for households affected by the proposed 
change in the income calculation, still leaves most households 
with a monthly subsidy in excess of $500 relative to market 
rents. In addition, hardship exemptions will be available to 
assist households facing difficult situations.
    My understanding is the FY2018 budget proposals were a 
first step toward a holistic rental reform package for 2019. If 
I'm confirmed, I look forward to participating in the 
development of that legislative proposal and will work with 
Congress to ensure we are able to provide efficient and 
effective support to the most vulnerable families.

Q.19. In my home State of New Jersey, New Jersey Community 
Capital (NJCC)--a nationally recognized Community Development 
Financial Institution--has been tremendously successful with 
the loans it has purchased through FHA's Distressed Asset 
Stabilization Program (DASP), which allows FHA to sell 
defaulted mortgages to investors. NJCC is able to make 
modifications to reduce loan balances and lower monthly 
payments for homeowners that are behind on their mortgages, 
allowing them to avoid foreclosure and stay in their homes. And 
where modifications are not possible, NJCC has turned 
foreclosed homes into affordable rental housing or new 
affordable ownership opportunities.
    Will you commit to making improvements to DASP that allow 
community-oriented groups like New Jersey Community Capital to 
purchase more loans and therefore achieve better outcomes for 
more homeowners and communities?

A.19. I know the DASP program has set aside pools for 
community-oriented organizations like NJCC. If confirmed, I 
want to see if we can find additional opportunities for groups 
like this to participate in the DASP program. This will be a 
priority for me.

Q.20. Will you commit to strengthening the program's loss 
mitigation, vacant property, and neighborhood stabilization 
standards so that we can ensure homeowners and neighborhoods 
are the beneficiaries of this program--not private equity firms 
and hedge funds?

A.20. My understanding is that HUD strengthened DASP's loss 
mitigation requirements, vacant property/neighborhood 
stabilization requirements, and enhanced nonprofit 
participation in 2016. If confirmed, I want to continue to 
evaluate and strengthen the program to ensure fair treatment of 
borrowers and encourage participation by nonprofit partners.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR DONNELLY FROM BRIAN D. MONTGOMERY

Q.1. On November 1, FHA intends to implement a new program 
called E-Tool, which has been developed by the HUD Office of 
Multifamily Housing. My understanding is there are lingering 
concerns about the readiness of the tool and whether computer 
programming issues still exist.
    Mr. Montgomery, what is the status of E-tool and do you 
believe it is ready for implementation? What steps can HUD take 
to ensure a smooth and glitch-free roll-out?

A.1. As you noted, it's my understanding that FHA rolled out 
its E-Tool on November 1 and multifamily lenders are now using 
it to submit all new applications. As a strong proponent of 
updating FHA's antiquated technology, I applaud the effort to 
improve the application process for FHA lenders. If confirmed, 
will ask for an update on the E-Tool during my first week.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ
                    FROM BRIAN D. MONTGOMERY

Q.1. Over its history, FHA has been an essential tool for the 
construction and permanent financing and refinancing of 
apartments. While less than 10 percent of the outstanding 
multifamily mortgage debt, the role it serves as a source of 
capital for underserved segments of the rental market cannot be 
overstated.
    Why are FHA's multifamily programs such a valuable source 
of capital?

A.1. Over time FHA has proven an important resource to 
stabilizing the market by playing a countercyclical role during 
financial downturns when capital markets tighten, as it did 
again through the financial crisis beginning in 2008. FHA's 
conservative approach, namely its long-term, fixed-interest 
rate, and fully amortizing debt, has proven a dependable source 
of capital for borrowers, lenders, and investors, especially in 
periods of capital tightening, and especially in otherwise 
underserved markets.

Q.2. FHA's multifamily programs largely performed well 
throughout the 2008 housing crisis and continue to do so today.
    Given these circumstances, do you support a robust FHA 
multifamily program? What changes can be made to encourage more 
multifamily construction to meet the housing shortage this 
country faces?

A.2. I support a robust FHA multifamily program so that it can 
continue to finance the construction and preservation of 
affordable housing, and so that it can continue to play its 
critical, historic role of providing countercyclical capital to 
the market. If confirmed, I believe program changes can be made 
to encourage greater use of FHA financing for multifamily 
construction, including better aligning programs with the use 
of Low Income Housing Tax Credits. Pursuing this robust mission 
must always be balanced with risk mitigation to protect FHA 
from losses.

Q.3. During the last Administration, HUD's Office of 
Multifamily Programs underwent a significant restructuring with 
the goal of improving transactional and operational efficiency.
    What is the status of the transformation? Do you think the 
effort was successful? Are there any changes you plan to 
implement going forward?

A.3. The Multifamily Transformation has been completed across 
the country. It's something I want to be briefed on, if I'm 
confirmed. From what I've heard, the results have been mostly 
positive, but I've also heard of growing pains in some parts of 
the country and I want to make sure we are sensitive to those 
concerns and that they are addressed. Clearly there is more 
work that needs to be done, but overall it seems the results 
have been positive.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
         SENATOR CORTEZ MASTO FROM BRIAN D. MONTGOMERY

Q.1. Last week, Secretary Carson vowed to reduce penalties 
against lenders for failing to originate loans according to 
Federal Housing Administration (FHA) standards. \1\ And in the 
past, in your role as a bank consultant, you have said that, 
``[t]he overreach of the False Claims Act by the Department of 
Justice has driven FHA's top producing lenders out of the 
Nation's flagship home buying program.''
---------------------------------------------------------------------------
     \1\ Joe Light, ``Ben Carson Vows To Pull Back on Mortgage 
Penalties at HUD'', Bloomberg. October 23, 2017. Available at: https://
www.bloomberg.com/news/articles/2017-10-23/hud-secretary-carson-vows-
to-pull-back-on-mortgage-penalties.
---------------------------------------------------------------------------
    When you went into the private sector, you advocated for a 
light-touch approach on banks for failing to meet FHA 
standards. But back in 2006, when you were FHA Commissioner, 
you said, ``as much as we intend to aggressively expand the FHA 
program--we will not do so at the expense of the financial 
soundness, integrity or reputation of the FHA.'' \2\ You went 
on to announce a False Claims Act settlement with one 
misbehaving lender, saying, ``we will take immediate action if 
our participating lenders, however large or small, fail to 
follow our underwriting requirements.''
---------------------------------------------------------------------------
     \2\ https://archives.hud.gov/news/2006/pr06-002.cfm
---------------------------------------------------------------------------
    Given that you've changed your mind on this issue, what 
assurances can you provide that you'll advocate for the 
interests of taxpayers if confirmed to FHA, and not your past--
and potentially future--bank clients?
    A blog published by your firm called the new mortgage rules 
following the financial crisis a ``regulatory jihad.'' \3\ 
These rules included a ban on dual-tracking homeowners, 
requirements to offer borrowers regular and clear monthly 
statements, and implementation of a fair review process for 
homeowners applying loan modifications. Do you think that this 
statement was fair?
---------------------------------------------------------------------------
     \3\ Ben Lane, ``Collingwood Group Chairman Calls Out `Regulatory 
Jihad' on Mortgage Lenders'', HousingWire. April 8, 2016. Available at: 
https://www.housingwire.com/articles/36743-collingwood-group-chairman-
calls-out-regulatory-jihad-on-mortgage-lenders.
---------------------------------------------------------------------------
    During your answers to questions at your confirmation 
hearing, you said that the Department of Justice pursued False 
Claims Act cases on the basis of ``clerical errors.'' Can you 
provide examples of the types of clerical errors that spurred 
such cases? To your knowledge, were any False Claims Act cases 
pursued solely on the basis of clerical errors?

A.1. I want to be very clear that I have not changed my mind on 
the critical importance of strong enforcement. I aggressively 
pursued cases against FHA lenders that perpetrated fraud or 
otherwise violated program guidelines during my tenure as FHA 
Commissioner, and if confirmed, will prioritize enforcement 
again. You rightly noted this is in the best interests of 
taxpayers, but it's also in the best interest of FHA borrowers, 
for most of whom a home will be the single largest investment 
they will make in their lives. Put simply, there's no room for 
fraud or misrepresentation in FHA.
    During my time in the private sector, I never advocated for 
a ``light-touch approach.'' Rather, our firm assisted clients 
when matters were brought to their attention usually by FHA 
staff. We later were asked to assist law firms assisting our 
clients when the False Claim Act was used against them. Our 
team of former FHA staff would review the loan file documents 
and determine based on our experience whether or not the errors 
the Government asserted were material in nature actually were 
material. In our experience, many times they were not material 
errors. For example, an error we frequently found in our review 
of loan files identified by the Department of Justice included 
miscalculating income. However, when we re-calculated the 
correct income, the loan still met FHA guidelines for debt-to-
income ratios. The finding was not material (especially in 
cases where the borrowers had been current for several years), 
but the Department of Justice would contend it was material 
because the initial calculation was wrong.
    We saw many cases in which the False Claims Act was used to 
hold a lender responsible for what were truly immaterial 
errors. You're absolutely correct that there were material 
errors as well. I don't think any case was ever brought solely 
on the basis of immaterial and administrative errors, but we 
saw numerous instances where minor errors were included in 
order to bolster a case and achieve a larger settlement. I 
thought that was the wrong way to go after lenders and 
ultimately it chased many of them out of the FHA program 
leaving borrowers with fewer choices--in particular, the large 
banks who exited the FHA program after decades of 
participation.
    Finally, with respect to the Nation's largest depository 
banks, it's worth noting they have all now settled their False 
Claims Act cases.
    With respect to the blog you brought to my attention, I 
want to make very clear this phrase was NOT made by me but 
rather a work colleague who certainly is entitled to his own 
opinion. That said, I would not have chosen those words.

Q.2. Back in May, I wrote a letter with Senator Rubio to 
Secretary Carson, inquiring about a particular provision buried 
in the HUD budget that would seemingly diminish protections for 
surviving spouses with HUD-insured reverse mortgages following 
the death of their spouse.
    I appreciate that the Department responded to our letter, 
and emphasized that it was not your intention to reduce 
protections against eviction currently afforded to seniors. But 
I still haven't been fully satisfied as to what the impact of 
this provision would be, if implemented. Some legal services 
attorneys my office has contacted in Nevada remain concerned. 
They believe that the language could give the Secretary more 
discretion not to transfer loans to surviving spouses upon the 
death of their partner.
    Can you commit to me that there will be absolutely no 
diminution in the protections afforded to surviving spouses in 
the reverse mortgage program under your watch?

A.2. During my briefings prior to my confirmation hearing, HUD 
staff informed me that the Department recently implemented new 
regulations formally codifying its commitment to protections 
for eligible non-borrowing HECM spouses. I share your view that 
we need to maintain protections for non-borrowing spouses and, 
if confirmed, want to work with you further on this issue.

Q.3. Currently, it is not mandatory for servicers to provide 
loss mitigation to FHA reverse mortgage borrowers when they 
fall behind on property taxes and insurance. Will you commit to 
making this loss mitigation mandatory?

A.3. I know FHA is committed to making loss mitigation options 
available to HECM servicers for borrowers who have fallen 
behind on their property taxes and insurance, but you are 
correct that these loss mitigation options are not mandatory. 
If confirmed, I would like to examine this issue more closely 
to fully understand how the requirement of loss mitigation for 
HECM borrowers might have financial implications to the MMI 
Fund.

Q.4. Mr. Montgomery, you currently serve on the board of a 
private mortgage insurance company that stands to profit based 
on certain decisions you may make at FHA. While you will have 
to abide by Government recusal policies, of course this creates 
the appearance of a conflict of interest in your job, if 
confirmed.
    For the benefit of public transparency, do you intend to 
return to the board of a mortgage insurance company upon the 
expiration of your term at FHA?

A.4. While I intend to return to the workforce in some capacity 
following my term as FHA Commissioner, if I'm confirmed, as far 
as I can foresee I have no plans and have made no arrangements 
to return to the board of a mortgage insurance company. 
Further, I believe my previous tenure as FHA Commissioner and 
later serving on the board of a private mortgage insurer 
provides me a unique and insightful view into the distinct 
roles each play in the mortgage marketplace.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                    FROM ROBERT HUNTER KURTZ

Q.1. In July of 2016, Congress enacted the Housing Opportunity 
Through Modernization Act (HOTMA). This legislation was widely 
supported across the spectrum of housing groups. It would 
streamline programs and help communities create new housing 
opportunities for vulnerable populations. Yet HUD has not fully 
implemented this legislation.
    Can you tell me whether you will make HOTMA implementation 
a priority, if you are confirmed?

A.1. If confirmed, I will make the implementation of HOTMA a 
priority for the Office of Public and Indian Housing (PIH). 
During Secretary Carson's testimony in the House Financial 
Services Committee, he indicated that around 75 percent of 
necessary actions have been completed or are currently 
underway. However, there is still more work to be done and, if 
confirmed, I will commit to implementing the remaining HOTMA 
provisions and providing PHAs with clear guidance that will 
assist them in making changes to their program operations.

Q.2. In your testimony, you say that you want to ``find ways to 
graduate residents from public housing and put them on a path 
to achieving greater economic mobility and self-sufficiency.'' 
Evicting someone from public housing would arguably put an 
individual ``on a path to achieving greater economic mobility 
and self-sufficiency.'' Someone could argue that a person who 
is homeless is self-sufficient and economically mobile.
    Since I am sure that is not what you had in mind, please 
describe how you would define these terms.
    Please describe some of the ways that you have in mind of 
improving the lives of current residents so they may secure 
decent, safe, and affordable private housing.
    How will you measure the progress and success of your 
efforts?

A.2. As a career houser, I would certainly disagree with anyone 
who believes that evictions are part of HUD's mission and that 
homelessness equates to that person being ``self-sufficient and 
economically mobile.'' If confirmed, I will advocate for a 
holistic approach to assisted housing for families that extends 
beyond the brick and mortar and focuses on providing 
opportunities for families to achieve self-sufficiency. In 
support of this effort, HUD has two programs in particular that 
are administered by Public and Indian Housing that support this 
holistic approach:
    The Family Self Sufficiency (FSS) program provided $75 
million to over 700 grantees last year, and in FY2016 provided 
services to over 70,000 households. In FSS, the head of 
household signs a contract of participation that maps out steps 
he/she will take to achieve self-sufficiency over the next 5 
years. The FSS coordinator works with that family member to 
develop that contract, and connects him/her to services and 
jobs that will help him/her become economically self-
sufficient.
    The Jobs Plus program, modeled after a successful evidence-
based pilot in the 1990s, has awarded $63 million in grants to 
24 Public Housing Authorities over the past 3 years. Jobs Plus 
uses three strategies--intense job training and case 
management, rent incentives, and community support for work--at 
targeted public housing developments over 4 years. Grantees 
work with all able-bodied residents in that development and 
measure employment training, job placement, and retention.
    The Jobs Plus and FSS programs are just two examples of 
successful self-sufficiency initiatives for our assisted 
families. If confirmed, I will also join the effort to examine 
the Section 3 work requirements--revisiting the regulation and 
its implementation to ensure better outcomes for families and 
less red tape for PHAs. If confirmed, I will also work with 
Secretary Carson on his Envision Center initiative, to better 
develop the potential of HUD assisted families through public-
private partnerships that would provide increased access to 
wrap-around services.
    Two ways to measure progress and success are measuring 
increases in income and increases in the number of positive 
exits (e.g., buying a home; renting a tax credit unit, etc.) 
from the public housing and HCV programs.

Q.3. In no State in the Nation can a full-time minimum-wage 
worker afford to rent a two-bedroom home at HUD's Fair Market 
Rent, and a one-bedroom home is affordable to such a worker in 
only 12 counties. According to the National Low Income Housing 
Coalition, six of the seven occupations expected to add the 
most jobs by 2024 have median wages that are less than the 
``housing wage'' necessary to afford a one bedroom apartment.
    Do you support an increase in the minimum wage in order to 
enable more workers to afford rent?

A.3. The minimum wage is established by Congress in conjunction 
with the Department of Labor through the Fair Labor Standards 
Act. If confirmed, in my role as Assistant Secretary for Public 
and Indian Housing, I will work with tenant advocate groups 
such as the National Low-Income Housing Coalition to address 
the needs of the people HUD serves. While the minimum wage is 
set by the Department of Labor, my experience as a housing 
practitioner informs me that HUD can have an impact in this 
area by providing communities with the necessary tools to help 
them develop more affordable housing.

Q.4. In your testimony before the Committee, you said that we 
should ``not just provide housing, but the wraparound services 
that we need to provide to ensure that we can graduate people 
out of public housing.''
    What additional services would you provide for public and 
Indian housing residents, and, given the funding cuts in 
President Trump's budget proposal, where will you find the 
Federal resources for these services without compromising HUD's 
mission to house families?

A.4. If confirmed, I will continue to support PIH's work with 
other Federal agencies through partnerships targeting housing, 
health, education, and workforce development. I would work to 
strengthen the already-existing relationships between HUD and 
other Federal agencies, but also work on creating new 
partnerships to better coordinate our work in providing 
resources and programs for low-income communities. I will also 
work with Secretary Carson on his Envision Center initiative, 
to better develop the potential of HUD assisted families 
through public-private partnerships that would provide 
increased access to wrap-around services.

Q.5. Mr. Montgomery and Mr. Kurtz, the rental assistance 
programs you administer affect many families, seniors, and 
individuals with disabilities.
    If confirmed, will you commit to meeting with assisted 
families and organizations that advocate on behalf of HUD 
program participants and low-income families?
    Do you support dialogue between HUD staff and organized 
tenant groups to assist HUD in its oversight of housing 
programs?

A.5. If confirmed, I will make it a priority to get out into 
the communities PIH serves, and meet with resident groups and 
advocacy organizations. I plan to personally engage in dialogue 
and strengthen relationships with tenant groups and advocacy 
organizations.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT
                    FROM ROBERT HUNTER KURTZ

Q.1. The Family Self-Sufficiency Program has enabled families 
in public housing to enroll in workforce training that allows 
them to pursue higher-paying employment opportunities.
    We are both housing folks and empowering them to reach for 
new economic opportunities.
    That's a win-win.
    Senators Reed and I have introduced the Family Self-
Sufficiency Act to save HUD resources by consolidating 
redundant programs and broaden the supportive services under 
FSS to include financial literacy training and GED courses.
    It's another win-win.
    Please answer the following with specificity:
    How can HUD better ``treat the whole person'' as Secretary 
Carson says?

A.1. If confirmed, I will strongly advocate for a holistic 
approach to assisted housing families that extends beyond 
bricks and mortar and focuses on providing opportunities for 
families to achieve self-sufficiency. In support of this 
effort, HUD has two programs in particular that are 
administered by Public and Indian Housing that support this 
holistic approach:
    The Family Self Sufficiency (FSS) program provided $75 
million to over 700 grantees last year, and in FY2016 provided 
services to over 70,000 households. In FSS, the head of 
household signs a contract of participation that maps out steps 
he/she will take to achieve self-sufficiency over the next 5 
years. The FSS coordinator works with that family member to 
develop that contract, and connects those families to services 
and jobs that will help them become economically self-
sufficient.
    The Jobs Plus program, modeled after a successful evidence-
based pilot in the 1990s, has awarded $63 million in grants to 
24 Public Housing Authorities over the past 3 years. Jobs Plus 
uses three strategies--intense job training and case 
management, rent incentives, and community support for work--at 
targeted public housing developments over 4 years. Grantees 
work with all able-bodied residents in that development.

Q.2. What are your ideas to do so?

A.2. The Jobs Plus and FSS programs are just two examples of 
successful self-sufficiency initiatives for our assisted 
families. If confirmed, I will also join the effort to examine 
the Section 3 work requirements, revisiting the regulation and 
its implementation to ensure better outcomes for families and 
less red tape for PHAs. If confirmed, I will also work with 
Secretary Carson on his Envision Center initiative to better 
develop the potential of HUD assisted families through public-
private partnerships that would provide increased access to 
wrap-around services.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR MENENDEZ FROM ROBERT HUNTER KURTZ

Q.1. During your nomination hearing, when asked about your 
opinion on the budget, you said that you had experience working 
in areas with limited resources, such as Detroit. Many of the 
future funding issues we face at HUD, however, are products of 
the Administration's creation, which has proposed to slash 
funding for public housing, tenant and property-based rental 
assistance, and various other programs. As the Assistant 
Secretary for Public and Indian Housing, your opinion on 
funding levels matters. Will you commit to advocating for 
increased funding for public housing and tenant-based rental 
assistance, among other programs?

A.1. I will always be an advocate for the families served by 
the office of Public and Indian Housing. In my time as a 
practitioner in Detroit, I saw firsthand how these resources 
are used and how public-private partnerships, and reducing 
regulatory burdens can serve the families that rely on HUD 
programs. I do believe the budget proposal is the beginning of 
an iterative process and, if confirmed, I will bring a housing 
practitioner's perspective to deliberations on future budgets 
and pledge to use funds appropriated by Congress to the best of 
my abilities.

Q.2. Are you willing to advocate for additional Federal 
resources to repair and renovate public housing developments?

A.2. I recognize that the budget process is an iterative one, 
and, if confirmed, I look forward to bringing my perspective as 
a housing practitioner to future budget deliberations and 
pledge to use funds appropriated by Congress to the best of my 
abilities. The investment necessary to address the public 
housing capital fund backlog is overwhelming, at over $26 
billion, and has grown steadily over the years regardless of 
funding levels. As a result, one vehicle that should be 
considered for expansion to address this backlog is the Rental 
Assistance Demonstration (RAD). To date, PHAs have generated 
over $4.5 billion in capital investment to improve or redevelop 
over 75,000 public housing units. Even at the highest 
appropriation levels seen in recent years, it would have taken 
these public housing authorities over 40 years to implement 
this amount of construction.

Q.3. The President's fiscal year 2018 budget request proposes 
elimination of the Choice Neighborhoods program.
    Do you support elimination of the Choice Neighborhoods 
program?

A.3. HUD did not seek funds for the Choice Neighborhoods 
program in the President's FY2018 Budget; however, HUD expects 
to make both Choice Planning and Implementation grants from the 
FY2017 Appropriations by February and July 2018, respectively. 
I do believe the budget proposal is the beginning of an 
iterative process and, if confirmed, I will bring a housing 
practitioner's perspective to deliberations on future budgets 
and pledge to use funds appropriated by Congress to the best of 
my abilities.

Q.4. If you do support the budget, please explain what 
alternative funding mechanisms will be provided to revitalize 
public and assisted housing and their surrounding communities?

A.4. Regarding the capital fund which is used to revitalize 
public and assisted housing, I believe the budget recognizes 
that public housing is a partnership between Federal, State, 
and local governments. If confirmed, I am committed to using my 
experience at HUD and in Detroit to help our local partners 
leverage outside public and private investment in addition to 
Federal funds to meet the capital repair and modernization 
needs of public housing properties, with an eye towards long-
term sustainability. I would also like to work with our housing 
authority partners to learn what flexibilities might allow them 
to better utilize funding to address local needs, while still 
protecting the residents we serve. One vehicle that should be 
considered for expansion to address this backlog is the Rental 
Assistance Demonstration (RAD) program. To date, PHAs have 
generated over $4.5 billion in capital investment to improve or 
redevelop over 75,000 public housing units. Even at the highest 
appropriation levels seen in recent years, it would have taken 
these public housing authorities over 40 years to implement 
this amount of construction.

Q.5. Do you support a 67 percent reduction to the Public 
Housing Capital Fund as proposed in the budget? If you do 
support the budget, please provide a detailed explanation of 
what funding sources public housing agencies can utilize to 
address the backlog of capital repairs estimated in 2010 to be 
at $26 billion and increasing each year.

A.5. I was not part of the decision-making process as it 
relates to developing the President's Fiscal Year 2018 Budget. 
I recognize that the budget process is an iterative one, and, 
if confirmed, I look forward to bringing my perspective as a 
housing practitioner to future budget deliberations and pledge 
to use funds appropriated by Congress to the best of my 
abilities. The investment necessary to address the capital fund 
backlog is overwhelming, at over $26 billion, and has grown 
steadily over the years regardless of funding levels. The 
capital needs of public housing can only be met by leveraging 
public and private funding--such as debt, low-income housing 
tax credit equity, bonds, city and State funding--with the 
available Federal funds. As a result, one vehicle that should 
be considered for expansion to address this backlog is the 
Rental Assistance Demonstration (RAD) program. To date, PHAs 
have generated over $4.5 billion in capital investment to 
improve or redevelop over 75,000 public housing units. Even at 
the highest appropriation levels seen in recent years, it would 
have taken these public housing authorities over 40 years to 
implement this amount of construction. Also, if confirmed, I am 
committed to providing PHAs with as many ``tools in the 
toolbox'' as possible to empower them to make the best 
decisions in their communities. Some examples of these tools 
are the Operating Fund Financing Program, Capital Fund 
Financing Program, Voluntary Conversions, Section 30 
(mortgaging) program, Operating and Capital Fund Flexibility, 
and Section 18 Demolition/Disposition authorities.

Q.6. Do you support a 12 percent reduction to the Public 
Housing Operating Fund as proposed in the budget? If you do 
support the budget, please describe how this proposed cut will 
impact public housing agencies' ability to operate and maintain 
the country's 1.1 million public housing units. Please also 
describe how the proposed cut will impact the residents living 
in public housing units.

A.6. I was not part of the decision-making process as it 
relates to developing the President's Fiscal Year 2018 Budget. 
I recognize that the budget process is an iterative one, and, 
if confirmed, I look forward to bringing my perspective as a 
housing practitioner to future budget deliberations and pledge 
to use funds appropriated by Congress to the best of my 
abilities. The FY2018 budget does include two important 
proposals that would provide PHAs with much needed 
flexibilities to better serve their families within the public 
housing budgetary constraints. Under the first legislative 
proposal, HUD seeks broad authority to waive statutory and 
regulatory requirements to provide PHAs with the flexibility to 
tailor and apply policies that address their individual needs 
and are acceptable within their local communities. The second 
legislative proposal extends 100 percent Operating and Capital 
fund flexibility to all PHAs (currently this only applies to 
small PHAs that have under 250 units). This flexibility would 
enable PHAs to focus scarce resources on local priorities 
without being constrained by the statutory limitations of each 
fund.

Q.7. Do you support a nearly 5 percent reduction to the Tenant 
Based Rental Assistance account as proposed in the budget? This 
proposed cut will result in elimination of approximately 
250,000 housing vouchers, nearly 8,000 of which are in New 
Jersey. If you do support the budget, how would you propose 
addressing the resulting increased housing instability and risk 
of homelessness?

A.7. I recognize the importance of this program and, if 
confirmed, I will continue to advocate for the families served 
by the Tenant Based Rental Assistance program. I was not part 
of the decision-making process as it relates to developing the 
President's Fiscal Year 2018 Budget. I recognize that the 
budget process is an iterative one, and, if confirmed, I look 
forward to bringing my perspective as a housing practitioner to 
future budget deliberations and pledge to use funds 
appropriated by Congress to the best of my abilities. The 
President's FY2018 Budget for the Housing Choice Voucher 
program renewal funding provides cost savings, waiver and 
offset authority, and administrative flexibilities for public 
housing agencies to prevent the termination of families due to 
insufficient funding. Within the Office of Public and Indian 
Housing, there is a specialized Shortfall Prevention Team that 
works with PHAs that may experience financial difficulties and 
assists them in ensuring that they are taking appropriate cost 
savings measures and applying for shortfall prevention funds, 
if necessary. If confirmed, I will make sure that this team 
continues to operate effectively, working with our partner PHAs 
to prevent terminations and ensure proper management of program 
funds.
                                ------                                


       RESPONSES TO WRITTEN QUESTIONS OF SENATOR HEITKAMP
                    FROM ROBERT HUNTER KURTZ

Q.1. I appreciated getting the chance to meet with you and 
discuss housing in Indian Country. As you know, there is a 
dearth of financing and collaboration of Government programs on 
tribal lands. In 2015, about a third of all lenders (about 
2,000 institutions) originated a loan to a Native American or 
Alaska Natives, but only about 165 made a loan on trust lands. 
Lender involvement has also declined in HUD's Section 184 
guaranteed home loan program.
    How to you plan to address this lack of equity access in 
Indian Country?

A.1. If confirmed, I will be committed to improving access to 
private mortgage capital in Indian Country.
    In January 2017, as part of the congressionally mandated 
Assessment of American Indian, Alaska Native, and Native 
Hawaiian Housing Needs, HUD published, Mortgage Lending on 
Tribal Land: A Report From the Assessment of American Indian, 
Alaska Native, and Native Hawaiian Housing Needs. The report 
finds that HUD's Indian Housing Loan Guarantee program, also 
known as the Section 184 program, successfully eliminates the 
functional market barrier to private lending presented by 
tribal trust land. The report also details several 
recommendations I am committed to pursuing to further increase 
lending to Native American families through efforts like 
enhanced agency coordination and regulatory improvements.

Q.2. Additionally, more than 90 percent of Section 184 loans 
occur off trust land.
    How can HUD build the capacity of smaller community banks 
and streamline the process to increase the rate of lending on 
trust land?

A.2. If confirmed, I pledge to work with the Bureau of Indian 
Affairs to streamline and improve the processing of certified 
Title Status Reports (TSRs) that are necessary to tribal trust 
land lending. In addition, I will support the continued 
investment in automation of HUD's Indian Housing Loan Guarantee 
program, also known as the Section 184 program, processes that 
will increase lender participation, and improve the efficiency 
of program Administration.

Q.3. HUD should take initiative to work with tribal authorities 
and other agencies to bring in other resources to complement 
and supplement NAHASDA funds. For example, the Department of 
Agriculture's Rural Development Agency has excellent home 
ownership and repair programs that would be very beneficial on 
trust lands. Federal agencies need to work together to maximize 
support for Native Americans.
    How do you plan on working with USDA Rural Development in 
partnership to serve Indian Country?

A.3. If confirmed, I pledge to meet with the Assistant to the 
Secretary for Rural Development within my first 30 days in 
office. Additionally, I will partner with tribes and tribally 
designated housing entities (TDHEs) to find and maximize all 
the resources that are available to Indian Country to support 
affordable housing development in a coordinated manner.

Q.4. In my conversation with him during his confirmation 
process, Secretary Carson focused on the importance of a 
holistic approach to housing. In that vein, I believe HUD needs 
to take trauma into consideration when looking for housing 
solutions, especially for Native American populations.
    I sent a letter to Secretary Carson earlier this month 
asking him to fill me in on what HUD has been working on with 
respect to trauma, but would like to hear your thoughts on the 
intersection of trauma and housing, and the need for trauma-
informed housing solutions.

A.4. As a former practitioner of many HUD programs in the City 
of Detroit, I have found that providing flexibility for HUD's 
local partners to address the needs of local populations, 
including those that have experienced trauma at any stage of 
life, is vital. If confirmed, I look forward to working with 
HUD's local partners and your office to ensure the needs of 
vulnerable populations are being met throughout all of PIH's 
programs.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR DONNELLY FROM ROBERT HUNTER KURTZ

Q.1. Mr. Kurtz, as nominee for Public Housing, you will oversee 
public housing authorities. As we learned in East Chicago, 
Indiana, where the lives of more than 300 families were upended 
and put at risk due to the presence of significant levels of 
lead and arsenic in the soil, contaminated housing units are 
dangerous to the health of residents.
    Mr. Kurtz, East Chicago was not an isolated incident. How 
do you plan to prepare and prevent similar crises from 
happening elsewhere? What steps can or should HUD take?

A.1. As a housing practitioner in Detroit, I have been subject 
to monitoring and have monitored grantees during my time at the 
Department. I believe that is where the rubber meets the road. 
If confirmed, I will look for ways that PIH can improve its 
monitoring process as well as partner with other agencies, 
including the EPA.

Q.2. Communities throughout Indiana have benefited from blight 
elimination funding, but the need remains significant. 
Abandoned and neglected buildings can often result in increased 
crime and distressed communities, demonstrating the need for 
blight elimination. I was troubled to see the proposed cuts to 
the CDBG program in the HUD budget.
    Mr. Kurtz, you have experience within this area at HUD. In 
addition to the importance of community planning and 
development, how can we help cities and towns combat housing 
blight if the CDBG program is eliminated? Do you oppose the 
elimination of the CDBG program?

A.2. Combating housing blight is a critical issue and one that 
I had firsthand experience with during my time in Detroit. In 
Detroit, we found success by reprioritizing State and local 
funding, while incentivizing the sale of blighted properties. I 
was not part of the decision-making process as it related to 
developing the Fiscal Year 2018 President's Budget. In Detroit, 
I have seen CDBG resources deployed in an effective and 
efficient manner, however, and from my time in Washington, I am 
also aware of these funds being used for things far outside of 
HUD's core mission. I do believe the budget proposal is the 
beginning of an iterative process and, if confirmed, I will 
bring a housing practitioner's perspective to deliberations on 
future budgets and pledge to use funds appropriated by Congress 
to the best of my abilities.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
         SENATOR CORTEZ MASTO FROM ROBERT HUNTER KURTZ

Q.1. The Trump administration's budget proposal for fiscal year 
2018 proposed cutting the public housing capital fund by two-
thirds. If that budget was enacted, the capital budget would be 
just one third of the lowest level of funding ever enacted.
    If enacted, tenants with leaky roofs would be ignored. 
Broken heating systems would go unrepaired. Faulty electrical 
wiring wouldn't be replaced.
    As one example, the Reno Housing Authority recently shared 
with my office that one property under their management needs 
nearly $450,000 in essential sewer repairs. Their total capital 
fund budget is $915,000, to be dispersed among eight 
properties. And two other senior housing developments also need 
sewer system upgrades.
    Secretary Carson has said that under his watch ``no one 
will be thrown out on the street.'' \1\ But if the Reno Housing 
Authority doesn't have the money to fix these sewer lines, the 
units will become uninhabitable. No amount of ``cutting red 
tape'' can address substantial, prolonged funding cuts.
---------------------------------------------------------------------------
     \1\ https://www.washingtonpost.com/news/post-politics/wp/2017/04/
03/carson-assures-advocates-that-white-house-will-include-housing-
funding-in-infrastructure-bill/?utm_term=.281c64576bdc
---------------------------------------------------------------------------
    How can the Administration justify a 68 percent cut to the 
fund dedicated to repairing public housing? Were you part of 
that decision in your role in Secretary's front office?

A.1. I was not part of the decision-making process as it 
relates to developing the President's Fiscal Year 2018 Budget. 
I do believe the budget proposal is the beginning of an 
iterative process and, if confirmed, I will bring a housing 
practitioner's perspective to deliberations on future budgets 
and pledge to use funds appropriated by Congress to the best of 
my abilities.
    Regarding the capital fund, I believe the budget recognizes 
that public housing is a partnership between Federal, State, 
and local governments. If confirmed, I am also committed to 
using my experience at HUD and in Detroit to help our local 
partners leverage outside public and private investment in 
addition to Federal funds to meet the capital repair and 
modernization needs of public housing properties, with an eye 
towards long-term sustainability. Finally, I would like to work 
with our housing authority partners to learn what flexibilities 
might allow them to better utilize funding to address local 
needs, while still protecting the residents we serve.

Q.2. If confirmed, will you advocate for additional public 
housing capital funding?

A.2. If confirmed, my top priority will be to advocate for the 
families participating in the Office of Public and Indian 
Housing (PIH) programs. I recognize that the budget process is 
an iterative one, and, if confirmed, I look forward to bringing 
my perspective as a housing practitioner to future budget 
deliberations and pledge to use funds appropriated by Congress 
to the best of my abilities. The investment necessary to 
address the capital fund backlog is overwhelming, at over $26 
billion, and has grown steadily over the years regardless of 
funding levels. As a result, one vehicle that should be 
considered for expansion to address this backlog is the Rental 
Assistance Demonstration (RAD). To date, PHAs have generated 
over $4.5 billion in capital investment to improve or redevelop 
over 75,000 public housing units. Even at the highest 
appropriation levels seen in recent years, it would have taken 
these public housing authorities over 40 years to implement 
this amount of construction.

Q.3. There's a $26 billion dollar backlog in needed public 
housing capital repairs. Secretary Carson has suggested 
addressing this by expanding the Rental Assistance 
Demonstration (RAD), which allows public housing authorities to 
borrow money from the private sector, and use their 
appropriations to service the debt now incurred on the public 
property.
    The problem with this approach is that this borrowing can't 
work if the appropriations aren't there in the first place. And 
beyond that, I'm not sure why we would want public housing to 
take on debt to fund repairs, rather than just pay for the 
repairs directly.
    How do you expect the RAD program to address the public 
housing capital repair backlog when the Administration is 
requesting deep cuts to appropriations?

A.3. Direct Federal appropriations to the public housing 
accounts have been unable to address the capital backlog in the 
public housing inventory. The Rental Assistance Demonstration 
(RAD) is a critical preservation program that has allowed PHAs 
to secure low-income housing tax credit investments, debt and 
other non-Federal funding to make needed capital repairs to 
these properties while protecting resident rights and ensuring 
ongoing public stewardship of the properties. To date, PHAs 
have generated over $4.5 billion in capital investment to 
improve or redevelop over 75,000 public housing units. Even at 
the highest appropriation levels seen in recent years, it would 
have taken these public housing authorities over 40 years to 
implement this amount of construction. This investment improves 
the condition of the housing now and makes a significant 
positive difference in residents' quality of life.

Q.4. How could a public housing authority service the repair-
related debt with the funding levels the Administration's 
budget suggests?

A.4. When a property converts under RAD, it shifts its source 
of subsidy funding from the public housing account to the 
Section 8 account. It is no longer reliant on public housing 
funding. Private financing sources are quite comfortable 
underwriting properties on the Section 8 platform.

Q.5. On July 5th, I sent a letter along with 28 of my Senate 
colleagues regarding HUD's decision to pull down from their 
website information that housing providers would be required to 
post about access to shelters without regard to sexual 
orientation or gender identity.
    During the Obama administration, HUD developed this 
information in consultation with homeless service providers and 
subject matter experts. The materials were designed to help 
housing operators comply with HUD nondiscrimination rules that 
protect LGBTQ individuals.
    I asked the nominee for Community Planning & Development at 
HUD, Neal Rackleff, for a response to my letter at his 
nomination hearing back in July, and he pledged to get me a 
response within two weeks. I have been patient in pushing HUD 
for a response, because I know Mr. Rackleff has been 
preoccupied with disaster recovery. But it's been three months 
now. While I know you won't be responsible for the homelessness 
portfolio if confirmed, you have been in Secretary Carson's 
front office. Will you pledge to immediately get me a response 
to this letter?

A.5. While I have not been involved in this issue to date, if 
confirmed, I pledge to immediately discuss the progress of this 
response with Assistant Secretary Rackleff and will urge the 
Department's relevant officials to complete this response in an 
expeditious manner. I also pledge, if confirmed, to work to 
protect all people being served by HUD's Office of Public and 
Indian Housing.

Q.6. The concept of ``Brooke Rents'' undergird our Nation's 
housing programs, providing that tenants should not pay more 
than 30 percent of their income for rent and utilities. Brooke 
Rent levels are based on research suggesting that rent 
exceeding this level simply isn't affordable for most low-
income people, seniors and people with disabilities. The 
President's proposed 2018 budget provides the HUD Secretary 
with the authority to increase a tenant's rent contribution up 
to 35 percent.
    Do you agree with housing experts and advocates that Brooke 
Rents ought to be protected in all HUD programs?

A.6. Please know that I will always be a staunch advocate for 
the families served by the Office of Public and Indian Housing. 
I learned through my experience in Detroit that giving 
flexibilities and control to local practitioners can deliver 
better results than mandates from D.C. If confirmed, I am 
committed to reviewing the rent calculation process to 
determine if some of its administrative burdens can be 
relieved, while maintaining adequate protections for our most 
vulnerable families.

Q.7. While the Administration claims that hardship exemptions 
would be available to households, what little we do know about 
the implementation of hardship policies on the ground indicates 
that they are likely only to protect a few families. And HUD 
doesn't collect or track data on how hardship exemptions are 
being enforced. So do you think current exemption policies to 
help vulnerable households are sufficient? What data do you 
have to support this opinion?

A.7. If confirmed, one of my first actions will be to go 
through the same intake process as a public housing or Housing 
Choice Voucher family. Through that process, I will be able to 
get a better sense of whether the current hardship exemption 
process is adequate. I will also review any available data on 
the use of hardship exemptions to determine if any changes are 
necessary, and, if not enough data is available, I will work to 
improve collection and tracking. Currently, there is some data 
available from Moving to Work Agencies which can be used to 
analyze the effectiveness of the current hardship policies.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                   FROM SUZANNE ISRAEL TUFTS

Q.1. Can you share with us some of your top priorities if you 
are confirmed as the Assistant Secretary for Administration?

A.1. If confirmed, my overall approach will be to re-imagine 
the way HUD works so that HUD's Administrative and Personnel 
divisions deliver timely and effective services to the 
Department's employees, its partners and, ultimately, to its 
customers.
    I plan to be a reformative thinker, to implement change, 
and to create a culture of excellence and accountability. 
Specifically, my three top priority goals are:

  1.  Improve HUD's talent and human resource processes so that 
        the Department can recruit and develop a high-
        performing, engaged, diverse workforce.

  2.  Improve administrative services so that they operate more 
        efficiently and intersect more effectively with human 
        resources and with the Department's program units both 
        at HQ and in the field.

  3.  Improve the Department's physical footprint both at 
        Headquarters and in the field, to achieve maximum space 
        efficiency and cost savings.

Q.2. HUD's FY2017 Congressional Justifications stated that HUD 
possesses the highest percentage of any agency of career 
employees eligible to retire by 2019. HUD stated that ``The 
retirement wave can cause a loss of leadership and 
institutional knowledge at all levels.''
    If confirmed, what would you do to ensure that HUD has the 
workforce it needs to deliver on its mission in the coming 
years, particularly in light of a possible wave of retirements?

A.2. Making HUD an attractive place to work with a highly 
skilled, diverse, and engaged workforce is one of my top 
priorities. If confirmed, I plan to approach workforce planning 
by starting with the approach set forth by Secretary Carson in 
his testimony before the Committee: ``listen and respect the 
career professionals. Engage them and utilize their advice and 
suggestions.'' I believe we have a lot to learn from the career 
staff in addition to having a lot to bring to them.
    Specifically, my priority would be to help prepare HUD for 
short term, large numbers of retirements by instituting 
creative knowledge transfer strategies such as cross training, 
employee mentoring, and process documentation. Second, in 
keeping with workplace best practices, I would institute a 
rapid approach to workforce planning utilizing the best data 
and career employee insights and input. Third, I would bring my 
experience in the field to enhance our recruitment creativity 
so that HUD can rapidly and efficiently reach out to the widest 
range of talent including Millennials; Gen-Xers; diverse 
candidates; and those from under-represented groups such as 
returning veterans, disabled individuals, Baby Boomers who want 
to on-ramp or who are mid-life career changers, pools of talent 
within the Federal arena such as Presidential Management 
Fellows, Peace Corps, and AmeriCorps ``graduates''; and other 
talented individuals.
    Finally, if confirmed and perhaps most important for the 
long run, I will work actively along with all program units and 
senior leadership to make HUD a dynamic workplace both in 
Headquarters and in the Regions, so that it can retain the 
talent it has and attract top talent.

Q.3. A recent HUD Inspector General's audit noted that HUD 
faces a significant potential litigation liability of between 
$55 million and $650 million for an arbitration known as the 
``Fair and Equitable Arbitration Remedy''. This case has been 
going on over 10 years.
    If confirmed, will you commit to looking into this case and 
working towards expeditious resolution to the case, if 
appropriate?

A.3. If confirmed, I commit to seeking guidance from the HUD 
Office of General Counsel and all other relevant HUD units to 
seek an expeditious resolution to this matter.



              Additional Material Supplied for the Record
              
              
              
 LETTERS SUBMITTED IN SUPPORT OF THE NOMINATION OF BRIAN D. MONTGOMERY
 
 
 
 
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 LETTERS SUBMITTED IN SUPPORT OF THE NOMINATION OF ROBERT HUNTER KURTZ
 
 
 
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